REPUBLIC VS.
SANDIGANBAYAN knowledge or they could not recall because it happened a
FACTS:
One of the foremost concerns of the Aquino Government
in February 1986 was the recovery of the unexplained or
ill-gotten wealth reputedly amassed by former President
and Mrs. Ferdinand E. Marcos, their relatives, friends and
business associates. Thus, the very first Executive Order
(EO) issued by then President Corazon Aquino upon her
assumption to office after the ouster of the Marcoses was
EO No. 1, issued on February 28, 1986. It created the
Presidential Commission on Good Government (PCGG)
and charged it with the task of assisting the President in
the "recovery of all ill-gotten wealth accumulated by
former President Ferdinand E. Marcos, his immediate
family, relatives, subordinates and close associates,
whether located in the Philippines or abroad, including
the takeover or sequestration of all business enterprises
and entities owned or controlled by them during his
administration, directly or through nominees, by taking
undue advantage of their public office and/or using their
powers, authority, influence, connections or
relationship."
In all the alleged ill-gotten wealth cases filed by the
PCGG, this Court has seen fit to set aside technicalities
and formalities that merely serve to delay or impede
judicious resolution. This Court prefers to have such cases
resolved on the merits at the Sandiganbayan. But
substantial justice to the Filipino people and to all parties
concerned, not mere legalisms or perfection of form,
should now be relentlessly and firmly pursued. Almost
two decades have passed since the government initiated
its search for and reversion of such ill-gotten wealth. The
definitive resolution of such cases on the merits is thus
long overdue. If there is proof of illegal acquisition,
accumulation, misappropriation, fraud or illicit conduct,
let it be brought out now. Let the ownership of these funds
and other assets be finally determined and resolved with
dispatch, free from all the delaying technicalities and
annoying procedural sidetracks.
RULING:
Respondents Answer dated October 18, 1993.
In their answer, respondents failed to specifically deny
each and every allegation contained in the petition for
forfeiture in the manner required by the rules. All they
gave were stock answers like they have no sufficient
long time ago, and, as to Mrs. Marcos, the funds were
lawfully acquired, without stating the basis of such
assertions.
Section 10, Rule 8 of the 1997 Rules of Civil Procedure,
provides:
A defendant must specify each material allegation of fact
the truth of which he does not admit and, whenever
practicable, shall set forth the substance of the matters
upon which he relies to support his denial. Where a
defendant desires to deny only a part of an averment, he
shall specify so much of it as is true and material and shall
deny the remainder. Where a defendant is without
knowledge or information sufficient to form a belief as to
the truth of a material averment made in the complaint, he
shall so state, and this shall have the effect of a denial.[28]
The purpose of requiring respondents to make a specific
denial is to make them disclose facts which will disprove
the allegations of petitioner at the trial, together with the
matters they rely upon in support of such denial. Our
jurisdiction adheres to this rule to avoid and prevent
unnecessary expenses and waste of time by compelling
both parties to lay their cards on the table, thus reducing
the controversy to its true terms. As explained in Alonso
vs. Villamor,[29]
A litigation is not a game of technicalities in which one,
more deeply schooled and skilled in the subtle art of
movement and position, entraps and destroys the other. It
is rather a contest in which each contending party fully
and fairly lays before the court the facts in issue and then,
brushing aside as wholly trivial and indecisive all
imperfections of form and technicalities of procedure,
asks that justice be done upon the merits. Lawsuits, unlike
duels, are not to be won by a rapiers thrust.
On the part of Mrs. Marcos, she claimed that the funds
were lawfully acquired. However, she failed to
particularly state the ultimate facts surrounding the lawful
manner or mode of acquisition of the subject funds.
Simply put, she merely stated in her answer with the other
respondents that the funds were lawfully acquired without
detailing how exactly these funds were supposedly
acquired legally by them. Even in this case before us, her
assertion that the funds were lawfully acquired remains
bare and unaccompanied by any factual support which
can prove, by the presentation of evidence at a hearing,
that indeed the funds were acquired legitimately by the
Marcos family.
1
Respondents denials in their answer at the Sandiganbayan
were based on their alleged lack of knowledge or
information sufficient to form a belief as to the truth of
the allegations of the petition.
It is true that one of the modes of specific denial under the
rules is a denial through a statement that the defendant is
without knowledge or information sufficient to form a
belief as to the truth of the material averment in the
complaint. The question, however, is whether the kind of
denial in respondents answer qualifies as the specific
denial called for by the rules. We do not think
so. In Morales vs. Court of Appeals,[30] this Court ruled
that if an allegation directly and specifically charges a
party with having done, performed or committed a
particular act which the latter did not in fact do, perform
or commit, a categorical and express denial must be made.
Here, despite the serious and specific allegations against
them, the Marcoses responded by simply saying that they
had no knowledge or information sufficient to form a
belief as to the truth of such allegations. Such a general,
self-serving claim of ignorance of the facts alleged in the
petition for forfeiture was insufficient to raise an issue.
Respondent Marcoses should have positively stated how
it was that they were supposedly ignorant of the facts
alleged.[31]
To elucidate, the allegation of petitioner Republic in
paragraph 23 of the petition for forfeiture stated:
23. The following presentation very clearly and
overwhelmingly show in detail how both respondents
clandestinely stashed away the countrys wealth to
Switzerland and hid the same under layers upon layers of
foundations and other corporate entities to prevent its
detection. Through their dummies/nominees, fronts or
agents who formed those foundations or corporate
entities, they opened and maintained numerous bank
accounts. But due to the difficulty if not the impossibility
of detecting and documenting all those secret accounts as
well as the enormity of the deposits therein hidden, the
following presentation is confined to five identified
accounts groups, with balances amounting to about $356-
M with a reservation for the filing of a supplemental or
separate forfeiture complaint should the need arise.[32]
Respondents lame denial of the aforesaid allegation was:
22. Respondents specifically DENY paragraph 23 insofar
as it alleges that Respondents clandestinely stashed the
countrys wealth in Switzerland and hid the same under
layers and layers of foundations and corporate entities for
being false, the truth being that Respondents aforesaid
properties were lawfully acquired.[33]
Evidently, this particular denial had the earmark of what
is called in the law on pleadings as a negative pregnant,
that is, a denial pregnant with the admission of the
substantial facts in the pleading responded to which are
not squarely denied. It was in effect an admission of the
averments it was directed at.[34] Stated otherwise, a
negative pregnant is a form of negative expression which
carries with it an affirmation or at least an implication of
some kind favorable to the adverse party. It is a denial
pregnant with an admission of the substantial facts alleged
in the pleading. Where a fact is alleged with qualifying or
modifying language and the words of the allegation as so
qualified or modified are literally denied, has been held
that the qualifying circumstances alone are denied while
the fact itself is admitted.[35]
In the instant case, the material allegations in paragraph
23 of the said petition were not specifically denied by
respondents in paragraph 22 of their answer. The denial
contained in paragraph 22 of the answer was focused on
the averment in paragraph 23 of the petition for forfeiture
that Respondents clandestinely stashed the countrys
wealth in Switzerland and hid the same under layers and
layers of foundations and corporate entities. Paragraph 22
of the respondents answer was thus a denial pregnant with
admissions of the following substantial facts:
(1) the Swiss bank deposits existed and
(2) that the estimated sum thereof was US$356 million as
of December, 1990.
Therefore, the allegations in the petition for forfeiture on
the existence of the Swiss bank deposits in the sum of
about US$356 million, not having been specifically
denied by respondents in their answer, were deemed
admitted by them pursuant to Section 11, Rule 8 of the
1997 Revised Rules on Civil Procedure:
Material averment in the complaint, xxx shall be deemed
admitted when not specifically denied. xxx.[36]
By the same token, the following unsupported denials of
respondents in their answer were pregnant with
admissions of the substantial facts alleged in the
Republics petition for forfeiture:
23. Respondents specifically DENY paragraphs 24, 25,
26, 27, 28, 29 and 30 of the Petition for lack of knowledge
or information sufficient to form a belief as to the truth of
the allegation since respondents were not privy to the
2
transactions regarding the alleged Azio-Verso-Vibur
Foundation accounts, except that, as to respondent Imelda
R. Marcos, she specifically remembers that the funds
involved were lawfully acquired.
24. Respondents specifically DENY paragraphs 31, 32,
33, 34, 35, 36, 37, 38, 39, 40, 41 of the Petition for lack
of knowledge or information sufficient to form a belief as
to the truth of the allegations since respondents were not
privy to the transactions and as to such transactions they
were privy to, they cannot remember with exactitude the
same having occurred a long time ago, except as to
respondent Imelda R. Marcos, she specifically remembers
that the funds involved were lawfully acquired.
25. Respondents specifically DENY paragraphs 42, 43,
45, and 46 of the petition for lack of knowledge or
information sufficient to from a belief as to the truth of
the allegations since respondents were not privy to the
transactions and as to such transaction they were privy to,
they cannot remember with exactitude, the same having
occurred a long time ago, except that as to respondent
Imelda R. Marcos, she specifically remembers that the
funds involved were lawfully acquired.
26. Respondents specifically DENY paragraphs 49, 50,
51 and 52 of the petition for lack of knowledge and
information sufficient to form a belief as to the truth of
the allegations since respondents were not privy to the
transactions and as to such transaction they were privy to
they cannot remember with exactitude the same having
occurred a long time ago, except that as to respondent
Imelda R. Marcos, she specifically remembers that the
funds involved were lawfully acquired.
The matters referred to in paragraphs 23 to 26 of the
respondents answer pertained to the creation of five
groups of accounts as well as their respective ending
balances and attached documents alleged in paragraphs
24 to 52 of the Republics petition for
forfeiture. Respondent Imelda R. Marcos never
specifically denied the existence of the Swiss funds. Her
claim that the funds involved were lawfully acquired was
an acknowledgment on her part of the existence of said
deposits. This only reinforced her earlier admission of the
allegation in paragraph 23 of the petition for forfeiture
regarding the existence of the US$356 million Swiss bank
deposits.
The allegations in paragraphs 47[37] and 48[38] of the
petition for forfeiture referring to the creation and amount
of the deposits of the Rosalys-Aguamina Foundation as
well as the averment in paragraph 52-a[39] of the said
petition with respect to the sum of the Swiss bank deposits
estimated to be US$356 million were again not
specifically denied by respondents in their answer. The
respondents did not at all respond to the issues raised in
these paragraphs and the existence, nature and amount of
the Swiss funds were therefore deemed admitted by
them. As held in Galofa vs. Nee Bon Sing,[40] if a
defendants denial is a negative pregnant, it is equivalent
to an admission.
Moreover, respondents denial of the allegations in the
petition for forfeiture for lack of knowledge or
information sufficient to form a belief as to the truth of
the allegations since respondents were not privy to the
transactions was just a pretense. Mrs. Marcos privity to
the transactions was in fact evident from her signatures on
some of the vital documents[41]attached to the petition for
forfeiture which Mrs. Marcos failed to specifically deny
as required by the rules.[42]
It is worthy to note that the pertinent documents attached
to the petition for forfeiture were even signed personally
by respondent Mrs. Marcos and her late husband,
Ferdinand E. Marcos, indicating that said documents were
within their knowledge. As correctly pointed out by
Sandiganbayan Justice Francisco Villaruz, Jr. in his
dissenting opinion:
The pattern of: 1) creating foundations, 2) use of
pseudonyms and dummies, 3) approving regulations of
the Foundations for the distribution of capital and income
of the Foundations to the First and Second beneficiary
(who are no other than FM and his family), 4) opening of
bank accounts for the Foundations, 5) changing the names
of the Foundations, 6) transferring funds and assets of the
Foundations to other Foundations or Fides Trust, 7)
liquidation of the Foundations as substantiated by the
Annexes U to U-168, Petition [for forfeiture] strongly
indicate that FM and/or Imelda were the real owners of
the assets deposited in the Swiss banks, using the
Foundations as dummies.[43]
How could respondents therefore claim lack of sufficient
knowledge or information regarding the existence of the
Swiss bank deposits and the creation of five groups of
accounts when Mrs. Marcos and her late husband
personally masterminded and participated in the
formation and control of said foundations? This is a fact
respondent Marcoses were never able to explain.
3
Not only that. Respondents' answer also technically
admitted the genuineness and due execution of the
Income Tax Returns (ITRs) and the balance sheets of the
late Ferdinand E. Marcos and Imelda R. Marcos attached
to the petition for forfeiture, as well as the veracity of the
contents thereof.
The answer again premised its denials of said ITRs and
balance sheets on the ground of lack of knowledge or
information sufficient to form a belief as to the truth of
the contents thereof. Petitioner correctly points out that
respondents' denial was not really grounded on lack of
knowledge or information sufficient to form a belief but
was based on lack of recollection. By reviewing their own
records, respondent Marcoses could have easily
determined the genuineness and due execution of the
ITRs and the balance sheets. They also had the means and
opportunity of verifying the same from the records of the
BIR and the Office of the President. They did not.
When matters regarding which respondents claim to
have no knowledge or information sufficient to form a
belief are plainly and necessarily within their knowledge,
their alleged ignorance or lack of information will not be
considered a specific denial.[44] An unexplained denial of
information within the control of the pleader, or is readily
accessible to him, is evasive and is insufficient to
constitute an effective denial.[45]
The form of denial adopted by respondents must be
availed of with sincerity and in good faith, and certainly
not for the purpose of confusing the adverse party as to
what allegations of the petition are really being
challenged; nor should it be made for the purpose of
delay.[46] In the instant case, the Marcoses did not only
present unsubstantiated assertions but in truth attempted
to mislead and deceive this Court by presenting an
obviously contrived defense.
Simply put, a profession of ignorance about a fact which
is patently and necessarily within the pleaders knowledge
or means of knowing is as ineffective as no denial at
all.[47]Respondents ineffective denial thus failed to
properly tender an issue and the averments contained in
the petition for forfeiture were deemed judicially admitted
by them.
As held in J.P. Juan & Sons, Inc. vs. Lianga Industries,
Inc.:
Its specific denial of the material allegation of the petition
without setting forth the substance of the matters relied
upon to support its general denial, when such matters
were plainly within its knowledge and it could not
logically pretend ignorance as to the same, therefore,
failed to properly tender on issue.
Thus, the general denial of the Marcos children of the
allegations in the petition for forfeiture for lack of
knowledge or information sufficient to form a belief as to
the truth of the allegations since they were not privy to the
transactions cannot rightfully be accepted as a defense
because they are the legal heirs and successors-in-interest
of Ferdinand E. Marcos and are therefore bound by the
acts of their father vis-a-vis the Swiss funds.
MANUEL C. BUNGCAYAO, SR., ETC VS. FORT
ILOCANDIA PROPERTY HOLDINGS AND
DEVELOPMENT CORP.
FACTS:
Manuel C. Bungcayao, Sr. (petitioner) claimed to
be one of the two entrepreneurs who introduced
improvements on the foreshore area of Calayab Beach in
1978 when Fort Ilocandia Hotel started its construction in
the area. Thereafter, other entrepreneurs began setting up
their own stalls in the foreshore area. They later formed
themselves into the DSierto Beach Resort Owners
Association, Inc. (DSierto).
In July 1980, six parcels of land in Barrio Balacad
(now Calayad) were transferred, ceded, and conveyed to
the Philippine Tourism Authority (PTA) pursuant to
Presidential Decree No. 1704. Fort Ilocandia Resort Hotel
was erected on the area. In 1992, petitioner and other
DSierto members applied for a foreshore lease with the
Community Environment and Natural Resources Office
(CENRO) and was granted a provisional permit. On 31
January 2002, Fort Ilocandia Property Holdings and
Development Corporation (respondent) filed a foreshore
application over a 14-hectare area abutting the Fort
Ilocandia Property, including the 5-hectare portion
applied for by DSierto members. The foreshore
applications became the subject matter of a conflict case,
docketed Department of Environment and Natural
Resources (DENR) Case No. 5473, between respondent
and DSierto members. In an undated Order, DENR
Regional Executive Director Victor J. Ancheta denied the
foreshore lease applications of the DSierto members,
including petitioner, on the ground that the subject area
applied for fell either within the titled property or within
the foreshore areas applied for by respondent. The
DSierto members appealed the denial of their
4
applications. In a Resolution dated 21 August 2003, then
DENR Secretary Elisea G. Gozun denied the appeal on
the ground that the area applied for encroached on the
titled property of respondent based on the final
verification plan.
Petitioner alleged that his son, Manuel
Bungcayao, Jr., who attended the meeting, manifested
that he still had to consult his parents about the offer but
upon the undue pressure exerted by Atty. Marcos, he
accepted the payment and signed the Deed of
Assignment, Release, Waiver and Quitclaim[6] in favor
of respondent.
Petitioner then filed an action for declaration of
nullity of contract before the Regional Trial Court of
Laoag, City, Branch 13 (trial court), docketed as Civil
Case Nos. 12891-13, against respondent. Petitioner
alleged that his son had no authority to represent him and
that the deed was void and not binding upon him.
In an Order dated 6 November 2003, the trial
court confirmed the agreement of the parties to cancel the
Deed of Assignment, Release, Waiver and Quitclaim and
the return of P400,000 to respondent. Petitioners counsel,
however, manifested that petitioner was still maintaining
its claim for damages against respondent.
Petitioner and respondent agreed to consider the
case submitted for resolution on summary judgment.
Thus, in its Order dated 28 November 2003, the trial court
considered the case submitted for resolution. Petitioner
filed a motion for reconsideration, alleging that he
manifested in open court that he was withdrawing his
earlier manifestation submitting the case for resolution.
Respondent filed a Motion for Summary Judgment.
ISSUES
a. Whether respondents counterclaim is
compulsory
b. Whether summary judgment is appropriate in
this case
HELD
a. Yes. A compulsory counterclaim is any claim
for money or any relief, which a defending
party may have against an opposing party,
which at the time of suit arises out of, or is
necessarily connected with, the same
transaction or occurrence that is the subject
matter of the plaintiffs complaint. It is
compulsory in the sense that it is within the
jurisdiction of the court, does not require for
its adjudication the presence of third parties
over whom the court cannot acquire
jurisdiction, and will be barred in the future if
not set up in the answer to the complaint in
the same case. Any other counterclaim is
permissive.
The criteria to determine whether the
counterclaim is compulsory or permissive are as follows:
(a) Are issues of fact and law raised by the claim and by
the counterclaim largely the same?; (b) Would res
judicata bar a subsequent suit on defendants claim, absent
the compulsory rule; (c) Will substantially the same
evidence support or refute plaintiffs claim as well as
defendants counterclaim?; (d) Is there any logical
relations between the claim and the counterclaim? A
positive answer to all four questions would indicate that
the counterclaim is compulsory.
In this case, the only issue in the complaint is
whether Manuel, Jr. is authorized to sign the Deed of
Assignment, Release, Waiver and Quitclaim in favor of
respondent without petitioners express approval and
authority. In an Order dated 6 November 2003, the trial
court confirmed the agreement of the parties to cancel the
Deed of Assignment, Release, Waiver and Quitclaim and
the return of P400,000 to respondent. The only claim that
remained was the claim for damages against respondent.
The trial court resolved this issue by holding that any
damage suffered by Manuel, Jr. was personal to him. The
trial court ruled that petitioner could not have suffered any
damage even if Manuel, Jr. entered into an agreement
with respondent since the agreement was null and void.
PHILTRANCO SERVICE ENTERPRISES, INC. VS.
FELIX PARAS AND INLAND TRAILWAYS, INC
ET AL.
Facts:
Felix Paras is engaged in the buy and sell of fish products.
Sometime on his way home to Manila from Bicol Region,
he boarded a bus owned and operated by Inland
Trailways, Inc. and driven by its driver Calvin Coner.
While the said bus was travelling, it was bumped at the
rear by another bus owned and operated by Philtranco
Service Enterprises, Inc. As a result of the strong and
violent impact, the Inland bus was pushed forward and
5
smashed into a cargo truck parked along the outer right
portion of the highway and the shoulder. Consequently,
the said accident bought considerable damage to the
vehicles involved and caused physical injuries to the
passengers and crew of the two buses, including the death
of Coner.
Paras was not spared from the effects of the accident. He
was taken for an emergency treatment in the nearby
hospital and thereafter taken to the National Orthopedic
Hospital in which underwent several operations.
In view of financial constraints, Paras filed a complaint
for damages based on breach of contract of carriage
against Inland to which it denied responsibility, by
alleging, among others, that its driver Coner had observed
an utmost and extraordinary care and diligence to ensure
the safety of its passengers. In support of it, Inland
invoked the Police Investigation Report which established
the fact that the Philtranco bus driver, Apolinar Miralles
was the one which violently bumped the rear portion of
the Inland bus, and therefore, the direct and proximate
cause of Paras’ injuries.
The RTC ruled in favor of Paras and held that Philtranco
and Apolinar Miralles jointly and severally liable for
actual and moral damages including attorney’s fees
On appeal to the CA, it affirmed the RTC’s ruling that no
trace of negligence at the time of the accident was
attributable to Inland’s driver, rendering Inland not guilty
of breach of contract of carriage.
RULING:
Impleading Philtranco and its driver through the third-
party complaint filed on March 2, 1990 was correct. The
device of the third-party action, also known as
impleader, was in accord with Section 12, Rule 6 of
the Revised Rules of Court, the rule then applicable, viz:
Section 12. Third-party complaint. A third-party
complaint is a claim that a defending party may, with
leave of court, file against a person not a party to the
action, called the third-party defendant, for contribution,
indemnity, subrogation or any other relief, in respect of
his opponents claim.[12]
Explaining the application of Section 12, Rule
6, supra, the Court said in Balbastro v. Court of
Appeals,[13] to wit:
Section 12 of Rule 6 of the Revised Rules of Court
authorizes a defendant to bring into a lawsuit any person
not a party to the action . . . for contribution, indemnity,
subrogation or any other relief in respect of his opponent's
claim. From its explicit language it does not compel the
defendant to bring the third-parties into the litigation,
rather it simply permits the inclusion of anyone who
meets the standard set forth in the rule. The secondary or
derivative liability of the third-party is central whether the
basis is indemnity, subrogation, contribution, express or
implied warranty or some other theory. The impleader of
new parties under this rule is proper only when a right
to relief exists under the applicable substantive law.
This rule is merely a procedural mechanism, and
cannot be utilized unless there is some substantive
basis under applicable law.
Apart from the requirement that the third-party
complainant should assert a derivative or secondary
claim for relief from the third-party defendant there
are other limitations on said partys ability to implead.
The rule requires that the third-party defendant is not
a party to the action for otherwise the proper
procedure for asserting a claim against one who is
already a party to the suit is by means of counterclaim
or cross-claim under sections 6 and 7 of Rule 6. In
addition to the aforecited requirement, the claim
against the third-party defendant must be based upon
plaintiff's claim against the original defendant (third-
party claimant). The crucial characteristic of a claim
under section 12 of Rule 6, is that the original
defendant is attempting to transfer to the third-party
defendant the liability asserted against him by the
original plaintiff.
Accordingly, the requisites for a third-party action
are, firstly, that the party to be impleaded must not yet be
a party to the action; secondly, that the claim against the
third-party defendant must belong to the original
defendant; thirdly, the claim of the original defendant
against the third-party defendant must be based upon the
plaintiffs claim against the original defendant;
and, fourthly, the defendant is attempting to transfer to the
third-party defendant the liability asserted against him by
the original plaintiff.[14]
As the foregoing indicates, the claim that the third-party
complaint asserts against the third-party defendant must
be predicated on substantive law. Here, the substantive
law on which the right of Inland to seek such other relief
through its third-party complaint rested were Article 2176
and Article 2180 of the Civil Code, which read:
6
Article 2176. Whoever by act or omission causes damage
to another, there being fault or negligence, is obliged to
pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions
of this chapter. (1902a)
Article 2180. The obligation imposed by article 2176 is
demandable not only for ones own acts or omissions, but
also for those of persons for whom one is responsible.
xxx
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope
of their assigned tasks, even though the former are not
engaged in any business or industry.
xxx
The responsibility treated of in this article shall cease
when the persons herein mentioned prove that they
observed all the diligence of a good father of a family to
prevent damage. (1903a)
Paras cause of action against Inland (breach of contract of
carriage) did not need to be the same as the cause of action
of Inland against Philtranco and its driver (tort or quasi-
delict) in the impleader. It is settled that a defendant in a
contract action may join as third-party defendants those
who may be liable to him in tort for the plaintiffs claim
against him, or even directly to the plaintiff.[15] Indeed,
Prof. Wright, et al., commenting on the provision of
the Federal Rules of Procedure of the United States from
which Section 12, supra, was derived, observed so, to
wit:[16]
The third-party claim need not be based on the same
theory as the main claim. For example, there are cases in
which the third-party claim is based on an express
indemnity contract and the original complaint is framed
in terms of negligence. Similarly, there need not be any
legal relationship between the third-party defendant and
any of the other parties to the action. Impleader also is
proper even though the third partys liability is contingent,
and technically does not come into existence until the
original defendants liability has been established. In
addition, the words is or may be liable in Rule 14(a) make
it clear that impleader is proper even though the third-
party defendants liability is not automatically established
once the third-party plaintiffs liability to the original
plaintiff has been determined.
Nor was it a pre-requisite for attachment of the liability to
Philtranco and its driver that Inland be first declared and
found liable to Paras for the breach of its contract of
carriage with him.[17] As the Court has cogently
discoursed in Samala v. Judge Victor:[18]
Appellants argue that since plaintiffs filed a complaint for
damages against the defendants on a breach of contract of
carriage, they cannot recover from the third-party
defendants on a cause of action based on quasi-delict. The
third party defendants, they allege, are never parties liable
with respect to plaintiff s claim although they are with
respect to the defendants for indemnification,
subrogation, contribution or other reliefs. Consequently,
they are not directly liable to the plaintiffs. Their liability
commences only when the defendants are adjudged liable
and not when they are absolved from liability as in the
case at bar.
Quite apparent from these arguments is the misconception
entertained by appellants with respect to the nature and
office of a third party complaint.
Section 16, Rule 6 of the Revised Rules of Court defines
a third party complaint as a claim that a defending party
may, with leave of court, file against a person not a party
to the action, called the third-party defendant, for
contribution, indemnification, subrogation, or any other
relief, in respect of his opponents claim. In the case
of Viluan vs. Court of Appeals, et al., 16 SCRA 742
[1966], this Court had occasion to elucidate on the
subjects covered by this Rule, thus:
... As explained in the Atlantic Coast Line R. Co. vs. U.S.
Fidelity & Guaranty Co., 52 F. Supp. 177 (1943:)
From the sources of Rule 14 and the decisions herein
cited, it is clear that this rule, like the admiralty rule,
covers two distinct subjects, the addition of parties
defendant to the main cause of action, and the bringing in
of a third party for a defendants remedy over. xxx
If the third party complaint alleges facts showing a
third partys direct liability to plaintiff on the claim set
out in plaintiffs petition, then third party shall make
his defenses as provided in Rule 12 and his
counterclaims against plaintiff as provided in Rule 13.
In the case of alleged direct liability, no amendment
(to the complaint) is necessary or required. The
subject-matter of the claim is contained in plaintiff's
complaint, the ground of third partys liability on that
claim is alleged in third party complaint, and third
partys defense to set up in his answer to plaintiff's
7
complaint. At that point and without amendment, the
plaintiff and third party are at issue as to their rights
respecting the claim.
The provision in the rule that, The third-party defendant
may assert any defense which the third-party plaintiff may
assert to the plaintiffs claim, applies to the other subject,
namely, the alleged liability of third party defendant. The
next sentence in the rule, The third-party defendant is
bound by the adjudication of the third party plaintiffs
liability to the plaintiff, as well as of his own to the
plaintiff or to the third-party plaintiff applies to both
subjects. If third party is brought in as liable only to
defendant and judgment is rendered adjudicating
plaintiff's right to recover against defendant and
defendants rights to recover against third party, he is
bound by both adjudications.That part of the sentence
refers to the second subject. If third party is brought in as
liable to plaintiff, then third party is bound by the
adjudication as between him and plaintiff. That refers to
the first subject. If third party is brought in as liable to
plaintiff and also over to defendant, then third party is
bound by both adjudications. xxx
Under this Rule, a person not a party to an action may be
impleaded by the defendant either (a) on an allegation of
liability to the latter; (b) on the ground of direct liability
to the plaintiff-; or, (c) both (a) and (b). The situation in
(a) is covered by the phrase for contribution, indemnity or
subrogation; while (b) and (c) are subsumed under the
catch all or any other relief, in respect of his opponents
claim.
The case at bar is one in which the third party
defendants are brought into the action as directly
liable to the plaintiffs upon the allegation that the
primary and immediate cause as shown by the police
investigation of said vehicular collision between (sic)
the above-mentioned three vehicles was the
recklessness and negligence and lack of imprudence
(sic) of the third-party defendant Virgilio (should be
Leonardo) Esguerra y Ledesma then driver of the
passenger bus. The effects are that plaintiff and third
party are at issue as to their rights respecting the claim
and the third party is bound by the adjudication as
between him and plaintiff. It is not indispensable in the
premises that the defendant be first adjudged liable to
plaintiff before the third-party defendant may be held
liable to the plaintiff, as precisely, the theory of
defendant is that it is the third party defendant, and
not he, who is directly liable to plaintiff. The situation
contemplated by appellants would properly pertain to
situation (a) above wherein the third party defendant
is being sued for contribution, indemnity or
subrogation, or simply stated, for a defendant's
remedy over.[19]
It is worth adding that allowing the recovery of damages
by Paras based on quasi-delict, despite his complaint
being upon contractual breach, served the judicial policy
of avoiding multiplicity of suits and circuity of actions by
disposing of the entire subject matter in a single
litigation.[20]
FELIX MARTOS ET AL VS. NEW SAN JOSE
BUILDERS, INC.
FACTS:
New San Jose Builders, Inc. , is engaged in the
construction of road, bridges, buildings, and low cost
houses. Private respondents were hired by the the
petitioner. Sometime in 2000, petitioner was constrained
to slow down and suspend most of the works on the SJPP
project due to lack of funds of the National Housing
Authority. Thus, the workers were informed that many of
them [would] be laid off and the rest would be reassigned
to other projects. They refused to sign the appointment
papers as project employees and subsequently refused to
continue to work. Three Complaints for Illegal Dismissal
and for money claims were filed before the NLRC against
petitioner and Jose Acuzar, by private respondents who
claimed to be the former employees of petitioner. LA
handed down a decision declaring, among others, that
petitioner Felix Martos was illegally dismissed and
entitled to separation pay, backwages and other monetary
benefits; and dismissing, without prejudice, the
complaints/claims of the other complainants (petitioners).
Both parties appealed the LA decision to the NLRC.
The NLRC resolved the appeal by dismissing the one filed
by respondent and partially granting that of the other
petitioners. The CA explained that the NLRC committed
grave abuse of discretion in reviving the complaints of
petitioners despite their failure to verify the same.
Petitioners basically argue that the CA was wrong in
affirming the dismissal of their complaints due to their
failure to verify their position paper. They insist that the
lack of verification of a position paper is only a formal
and not a jurisdictional defect. Hence, it was not fatal to
8
their cause of action considering that the CA could have
required them to submit the needed verification.
ISSUE:
WON the court erred in dismissing the complaints.
RULING:
NO. The liberal construction of the rules may be invoked
in situations where there may be some excusable formal
deficiency or error in a pleading, provided that the same
does not subvert the essence of the proceeding and it at
least connotes a reasonable attempt at compliance with
the rules. Besides, fundamental is the precept that rules of
procedure are meant not to thwart but to facilitate the
attainment of justice; hence, their rigid application may,
for deserving reasons, be subordinated by the need for an
apt dispensation of substantial justice in the normal
course. They ought to be relaxed when there is subsequent
or even substantial compliance, consistent with the policy
of liberality espoused by Rule 1, Section 6.14 Not being
inflexible, the rule on verification allows for such
liberality. The petitioners were given a chance by the CA
to comply with the Rules when they filed their motion for
reconsideration, but they refused to do so. The Court
agrees with the CA that the dismissal of the other
complaints were brought about by the own negligence and
passive attitude of the complainants themselves
GEORGIA T. ESTEL VS. RECAREDO P. DIEGO,
SR. ET AL.
JURISPRUDENCE:
Verification is deemed substantially complied with when,
as in the instant case, one who has ample knowledge to
swear to the truth of the allegations in the complaint or
petition signs the verification, and when matters alleged
in the petition have been made in good faith or are true
and correct.
ATTY. EMMANUEL AGUSTIN, ET AL. VS.
ALEJANDRO CRUZ-HERRERA
PASCUAL AND SANTOS INC VS. THE MEMBERS
OF THE TRAMO WAKAS NEIGHBORHOOD
ASSOCIATION INC
FACTS:
The Director of the Land Managment Bureau (LMB)
granted the petition of respondent, The Members of the
Tramo Wakas Neighborhood Association, Inc. (TRAMO
WAKAS) which prayed for the grant of ownership over
3 parcels of land situated in Paranaque City. The same
property is being claimed by petitioner Pascual and
Santos Inc. (PSI). PSI appealed the said decision to higher
adjudicatory bodies but was denied and dismissed for lack
of merit.
The Court of Appeals (CA) likewise dismissed
the petition on the ground of Infirm Verification and
Certification of Non-forum Shopping for the same does
not show proof that the persons who signed therein were
duly authorized by the corporation. The
Courtfurther ruled that the petition has not been filed on
time.
ISSUE:
Whether or not the persons who executed
the verification and certification of non-forum shopping
attached to PSI‘s petition were authorized to do so
HELD:
Section 6 (d) of Rule 43 in relation to Section 2 of Rule
42 of the Rules of Court mandates that a petition for
review shall contain a sworn certification against forum
shopping in which the Pascual and Santos Inc. shall attest
that he has not commenced any other action involving the
same issues in this Court, the Court of Appeals or
different divisions thereof, or any other tribunal or
agency; if there is such other action or proceeding, he
must state the status of the same; and if he should
thereafter learn that a similar action or proceeding has
been filed or is pending before this Court, the Court of
Appeals, or different divisions thereof, or any other
tribunal or agency, he undertakes to promptly inform the
aforesaid courts and other tribunal or agency thereof
within five days therefrom.
For failure to comply with this mandate, Section 7 of Rule
43 provides that the failure of the petitioner to comply
with any of the foregoing requirements regarding the
payment of the docket and other lawful fees, the deposit
for costs, proof of service of the petition, and the contents
of and the documents which should accompany
9
the petition shall be sufficient ground for the
dismissal thereof.
The Court has ruled that the subsequent submission of
proof of authority to act on behalf of a petitioner
corporation justifies the relaxation of the Rules for the
purpose of allowing its petition to be given due course.
It must also be kept in mind that while the requirement of
the certificate of non-forum shopping is mandatory,
nonetheless the requirements must not be interpreted too
literally and thus defeat the objective of preventing the
undesirable practice of forum shopping.
ELSA D. MEDADO VS. HEIRS OF THE LATE
ANTONIO CONSING
FACTS: (Spouses Medado) and Estate of Consing
executed Deeds of Sale with Assumption of Mortgage of
the property identified as Hacienda.
As part of the deal, Spouses Medado undertook to assume
the estate's loan with (PNB).
Subsequent to the sale, however, the Estate of Consing
offered the subject lots to the government. Estate of
Consing also instituted with the RTC, an action for
rescission and damages against Spouses Medado due to
the alleged failure of the spouses to meet the conditions in
their agreement.
In the meantime while the case for rescission was
pending, Land Bank issued in favor of the Estate of
Consing a certificate of deposit of cash as compensation
for the lots.
Spouses Medado feared that LBP would release the full
proceeds thereof to the Estate of Consing, they institute
an action for injunction to restrain LBP from releasing
the remaining amount of the proceeds of the lots to Estate
of Consing, and restraining the Estate of Consing from
receiving these proceeds
RTC granter the injunction (Medado) and the Writ of
Preliminary Injunction was issued. The writ was
implemented 1 day before the hearing for the motion for
reconsideration filed by Heirs of Consing
Feeling aggrieved, the heirs of the late Antonio
Consing (Consing) questioned the RTC's order via a
petition for certiorari filed with the CA. They sought,
among other reliefs, the dismissal of the complaint for
injunction for violation of the rules on litis pendentia and
forum shopping. On the matter of the absence of a motion
for reconsideration of the trial court's order before
resorting to a petition for certiorari, the heirs explained
that the implementation of the questioned writs rendered
their motion for reconsideration moot and academic. The
heirs argued that their case was within the exceptions to
the general rule that a petition under Rule 65 will not lie
unless a motion for reconsideration is first filed.
CA NULLIFIED and SET ASIDE the ruling of RTC.
The CA ruled that the RTC gravely abused its
discretion in taking cognizance of Civil Case for
injunction during the pendency of Civil Case for
rescission and damages as this violates the rule against
forum shopping.
ISSUES:
Was the requirement for verification and certification
against forum shopping complied with by the heris of
consing when the same is solely signed by Soledad-
administratix?
Was the rule on forum shopping violated by (Sps
Medado) when they filed the complaint for injunction
during the pendency of the action for rescission
and damages ( filed by the estate of Consing).
HELD:
The requirements for verification and certification
against forum shopping in the CA petition were
substantially complied with, following
settled jurisprudence.
It was signed on behalf of her co-petitioners by virtue of
a Special Power of Attorney:
To protect, sue, prosecute, defend and adopt
whatever action necessary and proper relative and with
respect to our right, interest and participation over said
properties
Purpose of Verification:
verification requirement is simply intended to secure an
assurance that the allegations in the pleading are true
and correct, and not the product of the imagination or
a matter of speculation, and that the pleading is filed
in good faith.
10
 The general rule is that the certificate of non-
forum shopping must be signed by all the plaintiffs in a
case and the signature of only one of them is
insufficient. However, The rule of substantial
compliance may be availed of with respect to the contents
of the certification. Thus, under justifiable
circumstances, the Court has relaxed the rule requiring the
submission of such certification considering that
although it is obligatory, it is not jurisdictional.
Settled doctrine:
Verification and certification agasint forum shopping
Substantially complied with because all the petitioners
share a common interest and invoke a common cause
of action or defense.
verification of a pleading is a formal, not a jurisdictional,
requirement intended to secure the assurance that the
matters alleged in a pleading are true and correct.
There are recognized exceptions permitting resort to
a special civil action of certiorari even without first
filing a motion for reconsideration.
The general rule is that a motion for
reconsideration is a condition sine qua non before a
petition for certiorari may lie, its purpose being to grant
an opportunity for the court a quo to correct any error
attributed to it by re-examination of the legal and factual
circumstances of the case.
exceptions :
1. order is a patent nullity because the court a quo had no
jurisdiction;
2.urgent necessity for the resolution of the question, and
any further delay would prejudice the interests of the
Government or of the petitioner,
3. where, under the circumstances, a motion for
reconsideration would be useless;
4. where the petitioner was deprived of due process and
there is extreme urgency of relief
As correctly held by the CA, a motion for
reconsideration had become useless---- naissue na ang
writ of preliminary injunction and court had decided
to implement the writs
just a day before the scheduled hearing on said motion.
Forum-shopping exists when the elements of litis
pendentia concur. PRP-C
(1) identity of parties, or at least such parties as represent
the same interests in both actions,
(2) identity of rights asserted and relief prayed for, the
relief being founded on the same facts, and
(3) the identity of the two proceeding particulars is such
that any judgment rendered in the other action will,
regardless of which party is successful, amount to res
judicata in the action under consideration;
said requisites are also constitutive of the requisites
for auter action pendant or lis pendens.[18] Applying
the foregoing, there was clearly a violation of the rule
against forum shopping
All elements of litis pendentia are present with the
filing of the two cases.
identity of parties ==== both involving the estate and
heirs of the late Consing on one hand, and Spouses
Medado on the other. Primary litigants in the two action,
and their interests, are the same
identity of rights==== reliefs being founded on the same
set of facts. In both cases, the parties claim their supposed
right as owners of the subject properties.--- with Spouses
Medado as buyers and the heirs as sellers,
identity of the two cases ====is such as would render the
decision in the rescission case res judicata in the
injunction case, and vice versa.- (pag narescind- eh di
yung heirs and owner, therefore the injunction case of sps
Medado would have no basis. On the other hand if the
injunction case prevails, it’s as if saying that Sps Medado
are the owners, thus there is no cause of action to rescind
the deed of sale. )
The test of identity of causes of action lies not in the form
of an action but on whether the same evidence would
support and establish the former and the present causes
of action.
Factors to determine which case should be dismissed,
(1) the date of filing, with preference generally given
to the first action filed to be retained;
(2) whether the action sought to be dismissed was filed
merely to preempt the latter action or to anticipate
its filing and lay the basis for its dismissal; and
11
(3) whether the action is the appropriate vehicle for
litigating the issues between the parties
Ratio of res judicata requires that stability be accorded
to judgments. Controversies once decided on the merits
shall remain in repose for there should be an end to
litigation which, without the doctrine, would be
endless.
VIVIAN T. RAMIREZ ET. AL. VS. MAR FISHING
CO, INC., ET AL
FACTS:
On 28 June 2001, Mar Fishing sold its principal assets to
co-respondent Miramar Fishing Co., Inc. through public
bidding. In view of that transfer, Mar Fishing issued a
Memorandum on October 23, 2001, informing all its
workers that the company would cease to operate by the
end of the month, thereafter, it also notified the DOLE of
the closure of its business operations.
Mar Fishing labor union, Mar Fishing Workers Union
NFL and Miramar entered into a Memorandum of
Agreement, which provides that Miramar, shall absorb
Mar Fishing regular rank and file employees whose
performance was satisfactory, without loss of seniority
rights and privileges previously enjoyed.
Unfortunately, petitioners, who worked as rank and file
employees, were not hired or given separation pay by
Miramar.Thus, petitioners filed Complaints for illegal
dismissal with money claims before the Arbitration
Branch of the NLRC.
The labor arbiter found that Mar Fishing had necessarily
closed its operations, considering that Miramar had
already bought the tuna canning plant. By reason of the
closure, petitioners were legally dismissed for authorized
cause. In addition, even if Mar Fishing reneged on
notifying the DOLE within 30 days prior to its closure,
that failure did not make the dismissals void.
Consequently, the LA ordered Mar Fishing to give
separation pay to its workers.
Aggrieved, petitioners pursued the action before the
NLRC, which modified the LA Decision. Noting that Mar
Fishing notified the DOLE only two days before the
business closed, the labor court considered
petitionersdismissal as ineffectual. Hence, it awarded,
apart from separation pay, full back wages to petitioners
from the time they were terminated on 31 October 2001
until the date when the LA upheld the validity of their
dismissal on 30 July 2002. Additionally, the NLRC
pierced the veil of corporate fiction and ruled that Mar
Fishing and Miramar were one and the same entity, since
their officers were the same.Hence, both companies were
ordered to solidarily pay the monetary claims.
On reconsideration, the NLRC modified its ruling by
imposing liability only on Mar Fishing.
Despite the award of separation pay and back wages,
petitioners filed a Rule 65 Petition before the CA arguing
that both Mar Fishing and Miramar should be made liable
for their separation pay, and that their back wages should
be up to the time of their actual reinstatement. However,
finding that only 3 of the 228 petitioners signed the
Verification and Certification against forum shopping, the
CA instantly dismissed the action for certiorari against the
225 other petitioners without ruling on the substantive
aspects of the case.
ISSUE:
1. Whether or not the CA gravely erred in dismissing
their Petition for Review on the ground that their
pleading lacked a Verification and Certification against
forum shopping?
RULING:
The Rules of Court provide that a petition for certiorari
must be verified and accompanied by a sworn
certification of non-forum shopping. Failure to comply
with these mandatory requirements shall be sufficient
ground for the dismissal of the petition.
Because of petitioner noncompliance with the
requirements governing the certification of non-forum
shopping, no error could be validly attributed to the CA
when it ordered the dismissal of the special civil action
for certiorari. The lack of certification against forum
shopping is not curable by mere amendment of a
complaint, but shall be a cause for the dismissal of the
case without prejudice.Indeed, the general rule is that
subsequent compliance with the requirements will not
excuse a party's failure to comply in the first instance.
Thus, on procedural aspects, the appellate court correctly
dismissed the case.
12
ATTY. FE Q. PALMIANO SALVADOR VS.
CONSTANTINO ANGELES
Facts:
This is a petition to reversed and set aside the decision of
the CA dismissing the petition before them.
Respondent Angeles is one of the registered owners of a
parcel of land located in Sampaloc, Manila. This land is
occupied by Galiga from 1979 to 1993 with a lease
contract. Salvador alleged that she bought the land from
Galiga who represented the owner.
Angeles then sent a letter to Salvador demanding that
Salvador to vacate the property. Angeles then filed a
complaint for ejectment with the MTC of Manila.
MTC rendered its decision in favor of Angeles. Salvador
filed an appeal saying that Angeles had not authority at
the time of the filing of the suit. RTC denied the appeal.
Petitioner elevated the case to the CA, but CA affirmed
the RTC. Hence, this present petition.
Issue: Diaz's (respondent’s representative) failure to
proof his authority to represent.
Held:
"[i]f a complaint is filed for and in behalf of the plaintiff
[by one] who is not authorized to do so, the complaint is
not deemed filed. An unauthorized complaint does not
produce any legal effect. Hence, the court should dismiss
the complaint on the ground that it has no jurisdiction over
the complaint and the plaintiff."
Pursuant to the foregoing rulings, therefore, the MeTC
never acquired jurisdiction over this case and all
proceedings before it were null and void. The courts could
not have delved into the very merits of the case, because
legally, there was no complaint to speak of. The court's
jurisdiction cannot be deemed to have been invoked at all.
Petition is granted
CEROTERR REALTY CORP VS. CA
FACTS:
On March 16, 1994, plaintiff (Ceroferr Realty
Corporation) filed with the Regional Trial Court, Quezon
City, Branch 93, a complaint[7] against defendant Ernesto
D. Santiago (Santiago), for damages and injunction, with
preliminary injunction. In the complaint, Ceroferr prayed
that Santiago and his agents be enjoined from - claiming
possession and ownership over Lot No. 68 of the Tala
Estate Subdivision, Quezon City, covered by TCT No.
RT-90200 (334555); that Santiago and his agents be
prevented from making use of the vacant lot as a jeepney
terminal; that Santiago be ordered to pay Ceroferr
P650.00 daily as lost income for the use of the lot until
possession is restored to the latter; and that Santiago be
directed to pay plaintiff Ceroferr moral, actual and
exemplary damages and attorneys fees, plus expenses of
litigation.
In his answer, defendant Santiago alleged that the vacant
lot referred to in the complaint was within Lot No. 90 of
the Tala Estate Subdivision, covered by his TCT No. RT-
78 110 (3538); that he was not claiming any portion of
Lot No. 68 claimed by Ceroferr; that he had the legal right
to fence Lot No. 90 since this belonged to him, and he had
a permit for the purpose; that Ceroferr had no color of
right over Lot No. 90 and, hence, was not entitled to an
injunction to prevent Santiago from exercising acts of
ownership thereon; and that the complaint did not state a
cause of action.
In the course of the proceedings, an important issue
metamorphosed as a result of the conflicting claims of the
parties over the vacant lot actually used as a jeepney
terminal the exact identity and location thereof. There was
a verification survey, followed by a relocation survey,
whereby it would appear that the vacant lot is inside Lot
No. 68. The outcome of the survey, however, was
vigorously objected to by defendant who insisted that the
area is inside his lot. Defendant, in his manifestation
dated November 2, 1994, adverted to the report of a
geodetic engineer. Mariano V. Flotildes, to the effect that
the disputed portion is inside the boundaries of Lot No.
90 of the Tala Estate Subdivision which is separate and
distinct from Lot No. 68, and that the two lots are
separated by a concrete fence.
Because of the competing claims of ownership of the
parties over the vacant lot, it became inevitable that the
eye of the storm centered on the correctness of property
boundaries which would necessarily result in an inquiry
as to the regularity and validity of the respective titles of
the parties. While both parties have been brandishing
separate certificates of title, defendant asserted a superior
claim as against that of the plaintiff in that, according to
defendant, his title has been confirmed through judicial
reconstitution proceedings, whereas plaintiffs title does
not carry any technical description of the property except
13
only as it is designated in the title as Lot No. 68 of the
Tala Estate Subdivision.
It thus became clear, at least from the viewpoint of
defendant, that the case would no longer merely involve a
simple case of collection of damages and injunction
which was the main objective of the complaint - but a
review of the title of defendant vis--vis that of plaintiff.
At this point, defendant filed a motion to dismiss the
complaint premised primarily on his contention that the
trial court cannot adjudicate the issue of damages without
passing over the conflicting claims of ownership of the
parties over the disputed portion.
On May 14, 1996, the trial court issued the order now
subject of this appeal which, as earlier pointed out,
dismissed the case for lack of cause of action and lack of
jurisdiction. The court held that plaintiff was in effect
impugning the title of defendant which could not be done
in the case for damages and injunction before it. The court
cited the hoary rule that a Torens certificate of title cannot
be the subject of collateral attack but can only be
challenged through a direct proceeding. It concluded that
it could not proceed to decide plaintiffs claim for damages
and injunction for lack of jurisdiction because its
judgment would depend upon a determination of the
validity of defendants title and the identity of the land
covered by it.
From this ruling, plaintiff appealed to this court insisting
that the complaint stated a valid cause of action which was
determinable from the face thereof, and that, in any event,
the trial court could proceed to try and decide the case
before it since, under present law, there is now no
substantial distinction between the general jurisdiction
vested in a regional trial court and its limited jurisdiction
when acting as a land registration court, citing Ignacio v.
Court of Appeals 246 SCRA 242 (1995).
On March 26, 1999, the Court of Appeals promulgated a
decision dismissing the appeal.[8] On May 13, 1999,
petitioner filed with the Court of Appeals a motion for
reconsideration of the decision.[9] On July 29, 1999, the
Court of Appeals denied petitioners motion for
reconsideration for lack of merit.[10]
Hence, this appeal.[11]
ISSUE:
whether Ceroferrs complaint states a sufficient cause of
action
RULING:
We grant the petition.
The rules of procedure require that the complaint must
state a concise statement of the ultimate facts or the
essential facts constituting the plaintiffs cause of action.
A fact is essential if it cannot be stricken out without
leaving the statement of the cause of action inadequate. A
complaint states a cause of action only when it has its
three indispensable elements, namely: (1) a right in favor
of the plaintiff by whatever means and under whatever
law it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such
right; and (3) an act or omission on the part of such
defendant violative of the right of plaintiff or constituting
a breach of the obligation of defendant to the plaintiff for
which the latter may maintain an action for recovery of
damages.[12] If these elements are not extant, the
complaint becomes vulnerable to a motion to dismiss on
the ground of failure to state a cause of action.[13]
These elements are present in the case at bar.
The complaint[14] alleged that petitioner Ceroferr
owned Lot 68 covered by TCT No. RT-90200
(334555). Petitioner Ceroferr used a portion of Lot 68 as
a jeepney terminal.
The complaint further alleged that
respondent Santiago claimed the portion of Lot 68 used
as a jeepney terminal since he claimed that the jeepney
terminal was within Lot 90 owned by him and covered by
TCT No. RT-781 10 (3538) issued in his name.
Despite clarification from petitioner Ceroferr that the
jeepney terminal was within Lot 68 and not
within Lot 90, respondent Santiago persisted in his plans
to have the area fenced. He applied for and was issued a
fencing permit by the Building Official, Quezon City. It
was even alleged in the complaint that
respondent- Santiago was preventing petitioner Ceroferr
and its agents from entering the property under threats of
bodily harm and destroying existing structures thereon.
A defendant who moves to dismiss the complaint on the
ground of lack of cause of action, as in this case,
hypothetically admits all the averments thereof. The test
of sufficiency of the facts found in a complaint as
constituting a cause of action is whether or not admitting
the facts alleged the court can render a valid judgement
upon the same in accordance with the prayer thereof. The
hypothetical admission extends to the relevant and
14
material facts well pleaded in the complaint and
inferences fairly deducible therefrom. Hence, if the
allegations in the complaint furnish sufficient basis by
which the complaint can be maintained, the same should
not be dismissed regardless of the defense that may be
assessed by the defendants.[15]
In this case, petitioner Ceroferrs cause of action has been
sufficiently averred in the complaint. If it were admitted
that the right of ownership of petitioner Ceroferr to the
peaceful use and possession of Lot 68 was violated by
respondent Santiagos act of encroachment and fencing of
the same, then petitioner Ceroferr would be entitled to
damages.
ASIAN CONSTRUCTION AND DEVELOPMENT
CORP. VS. LOURDES K. MENDOZA
Factual Antecedents
On January 6, 2000, respondent Lourdes K. Mendoza,
sole proprietor of Highett Steel Fabricators (Highett),
filed before the Regional Trial Court (RTC)
of Caloocan City, Branch 126, a Complaint[4] for a sum of
money, docketed as Civil Case No. C-19100, against
petitioner Asian Construction and Development
Corporation, a duly registered domestic corporation.
In the complaint, respondent alleged that from the period
August 7, 1997 to March 4, 1998, petitioner purchased
from Highett various fabricated steel materials and
supplies amounting to P1,206,177.00, exclusive of
interests;[5] that despite demand, petitioner failed and/or
refused to pay;[6] and that due to the failure and/or refusal
of petitioner to pay the said amount,respondent was
compelled to engage the services of counsel.[7]
Petitioner moved for a bill of particulars on the ground
that no copies of the purchase orders and invoices were
attached to the complaint to enable petitioner to prepare a
responsive pleading to the complaint.[8] The RTC,
however, in an Order dated March 1, 2000, denied the
motion.[9] Accordingly, petitioner filed its Answer with
Counterclaim[10] denying liability for the claims and
interposing the defense of lack of cause of action.[11]
To prove her case, respondent presented the testimonies
of (1) Artemio Tejero (Tejero), the salesman of Highett
who confirmed the delivery of the supplies and materials
to petitioner, and (2) Arvin Cheng, the General Manager
of Highett.[12]
The presentation of evidence for petitioner, however, was
deemed waived and terminated due to the repeated non-
appearance of petitioner and its counsel.[13]
Petitioners Arguments
Petitioner argues that a charge or sales invoice is not an
actionable document; thus, petitioners failure to deny
under oath its genuineness and due execution does not
constitute an admission thereof.[20] Petitioner likewise
insists that respondent was not able to prove her claim as
the invoices offered as evidence were not properly
authenticated by her witnesses.[21]Lastly, petitioner claims
that the CA erred in affirming the award of attorneys fees
as the RTC Decision failed to expressly state the basis for
the award thereof.[22]
Respondents Arguments
Respondent, in her Comment,[23] prays for the dismissal
of the petition contending that the arguments raised by
petitioner are a mere rehash of those presented and
already passed upon by the CA.[24] She maintains that
charge invoices are actionable documents,[25] and that
these were properly identified and authenticated by
witness Tejero, who testified that upon delivery of the
supplies and materials, the invoices were stamped
received by petitioners employee.[26] Respondent
contends that the award of attorneys fees was justified as
the basis for the award was clearly established during the
trial.[27]
RULING:
The petition is partly meritorious.
The charge invoices are not actionable documents
Section 7 of Rule 8 of the Rules of Court states:
SEC. 7. Action or defense based on document. Whenever
an action or defense is based upon a written instrument or
document, the substance of such instrument or
document shall be set forth in the pleading, and the
original or a copy thereof shall be attached to the
pleading as an exhibit, which shall be deemed to be a
part of the pleading, or said copy may with like effect be
set forth in the pleading. (Emphasis supplied.)
Based on the foregoing provision, a document is
actionable when an action or defense is grounded upon
such written instrument or document. In the instant case,
the Charge Invoices[28] are not actionable documents per
se as these only provide details on the alleged
15
transactions.[29] These documents need not be attached to
or stated in the complaint as these are evidentiary in
nature.[30] In fact, respondents cause of action is not based
on these documents but on the contract of sale between
the parties.
Delivery of the supplies and materials was duly proved
But although the Charge Invoices are not actionable
documents, we find that these, along with the Purchase
Orders,[31] are sufficient to prove that petitioner indeed
ordered supplies and materials from Highett and that these
were delivered to petitioner.
Moreover, contrary to the claim of petitioner, the Charge
Invoices were properly identified and authenticated by
witness Tejero who was present when the supplies and
materials were delivered to petitioner and when the
invoices were stamped received by petitioners employee,
Roel Barandon.[32]
It bears stressing that in civil cases, only a preponderance
of evidence or greater weight of the evidence is
required.[33] In this case, except for a bare denial, no other
evidence was presented by petitioner to refute
respondents claim. Thus, we agree with the CA that the
evidence preponderates in favor of respondent.
Basis for the award of Attorneys fees must be stated in
the decision
However, with respect to the award of attorneys fees to
respondent, we are constrained to disallow the same
as the rationale for the award was not stated in
the text of the RTC Decision but only in the dispositive
portion.[34]
SPOUSES FERNANDO AND MARIA ELENA
SANTOS VS. LOLITA ALCAZAR
FACTS: Respondent Alcazar was the proprieter of
Legazpi Color Center (LCC). Alcazar filed a complaint
for sum of money against petitioners for the collection of
the value of paint and construction materials in the
amount of 1,456,000. The Acknowledgment executed by
Petitioner Fernando was the basis of Alcazar’s cause of
action. Under the said Acknowledgment, Petitioner
Fernando acknowledged his obligation with LCC to pay
the value of the paint and construction materials in the
amount of 1,456,000.
Petitioners specifically denied the allegations of Alcazar
and contended that the actionable document does not
reflect their real indebtedness as well as the true contract
or intention of the parties. The document does not reflect
the correct amount which is only P600,000. Thus,
petitioners sought the dismissal of the Complaint.
Petitioners filed a Demurrer to Evidence and argued that
the Acknowledgment presented in court was not an
original copy, hence, inadmissible. Trial court denied
petitioners’ demurrer and scheduled the presentation of
petitioners’ evidence. Thereafter, petitioners moved to
reset the scheduled on the ground that on the scheduled
hearing, their counsel was to appear in another scheduled
case. However, the trial court denied the motion to reset
for lack of merit and for violating Section 4, Rule 15 of
the Rules of Civil Procedure. The trial court declared that
the petitioners have waived their right to present evidence.
Petitioners filed a petition for certiorari to the CA and
questioned the denial of their demurrer but the CA
sustained the TC’s denial of their demurrer.
Regional Trial Court’s Decision: RTC rendered judgment
in favor of respondent Alcazar and ordered petitioners to
pay plaintiff the sum of 1,456,000 plus interest, litigation
and attorney’s fees. It held that petitioners admitted that
they entered into transactions with Alcazar for the
delivery of paint and construction materials and that from
the Acknowledgment, petitioners admitted that their
unpaid obligation is P1,456,000.
CA’s Decision: On appeal, the petitioners alleged that the
RTC erred in allowing Alcazar to present her evidence ex
parte.
It sustained the trial court’s denial of petitioners’
demurrer. The CA held that petitioners failed to deny
specifically under oath the genuineness and due execution
of the Acknowledgment, consequently, its genuineness
and due execution are deemed admitted, there was thus no
need to present the original thereof, and petitioners’
liability was sufficiently established.
ISSUE: Whether or not the Pre-trial Conference is a sham
as there are no records to show that it was conducted.
HELD: No. Court found them to be without merit. A pre-
trial conference was held, and that petitioners'
representative was present therein. Moreover, the
proceedings were covered by the required pre-trial order,
which may itself be considered a record of the pre-trial. In
said order, the November 8, 2005 pre-scheduled hearing
was particularly specified. Thus, from the very start,
16
petitioners knew of the November 8 hearing; if they failed
to attend, no fault may be attributed to the trial court.
TANTUICO, JR. VS. REPUBLIC
Topic: Pleadings, Alleging Cause of Action
Provisions: Sec. 1, Rule 12
FACTS:
July 31, 1987: The Republic filed a case (reconveyance,
revision, accounting, restitution and damages) against
Kokoy Romualdez, Ferdinand Marcos and Imelda
Marcos. Petitioner Tantuico was also included based on a
couple of theories
(1) He acted in unlawful concert w/ other defendants
in misappropriation of public funds
(2) Acted as dummy by allowing himself to be
incorporator, director among other capacities in
companies held by defendants
(3) Acted in flagrant breach of public trust and
fiduciary obligations as public officers
(4) As COA chair, failed to do his duties
(5) Dummy as instrument of accumulated ill-gotten
wealth through the corporations
__________________________
PROCEDURAL HISTORY:
Sandiganbayan:
Motion for production and inspection of documents
denied
Petitioner filed for Bill of Particulars, alleging that as he
is being sued as public officer and private person, he
deserves to have been furnished averments by plaintiff-
denied stating that the grounds are evidentiary in nature
SC:
Certiorari, prohibition, mandamus w/ prayer for issuance
of prelim injcunction and/or restraining order.
ISSUE:
1. WON Sandiganbayan erred in not granting the bill of
particulars as prayed for by the plaintiff (YES)
HELD:
1. YES. Bill of particulars must be granted.
A complaint is defined as a concise statement of the
ultimate facts constituting the plaintiff's cause or causes
of action. Like all other pleadings allowed by the Rules of
Court, the complaint shall contain in a methodical and
logical form a plain, concise and direct statement of the
ultimate facts on which the plaintiff relies for his claim,
omitting the statement of mere evidentiary facts. Its
office, purpose or function is to inform the defendant
clearly and definitely of the claims made against him so
that he may be prepared to meet the issues at the trial. The
complaint should inform the defendant of all the material
facts on which the plaintiff relies to support his demand;
it should state the theory of a cause of action which forms
the bases of the plaintiff's claim of liability.
Where the complaint states ultimate facts that constitute
the three (3) essential elements of a cause of action,
namely: (1) the legal right of the plaintiff, (2) the
correlative obligation of the defendant, and (3) the act or
omission of the defendant in violation of said legal right,
the complaint states a cause of action, otherwise, the
complaint must succumb to a motion to dismiss on that
ground of failure to state a cause of action. However,
where the allegations of the complaint are vague,
indefinite, or in the form of conclusions, the proper
recourse would be, not a motion to dismiss, but a motion
for a bill of particulars. Thus, Section 1, Rule 12 of the
Rules of Court provides:
Before responding to a pleading or, if no responsive
pleading is permitted by these rules, within ten (10) days
after service of the pleading upon him, a party may move
for a more definite statement or for a bill of particulars of
any matter which is not averred with sufficient
definiteness or particularity to enable him properly to
prepare his responsive pleading or to prepare for trial.
Such motion shall point out the defects complained of and
the details desired.
In this connection, the following allegations have been
held as mere conclusions of law, inferences from facts
not alleged or opinion of the pleader:
(a) the allegations that defendants appellees were
"actuated by ulterior motives, contrary to law and morals,
with abuse of their advantageous position as employers,
in gross and evident bad faith and without giving plaintiff
. . . his due, wilfully, maliciously, unlawfully, and in
summary and arbitrary manner", are conclusions of law,
17
inferences from facts not alleged and expressions of
opinion unsupported by factual premises;
(b) an allegation of duty in terms unaccompanied by a
statement of facts showing the existence of the duty, is a
mere conclusion of law, unless there is a relation set forth
from which the law raises the duty;
(c) an averment . . . that an act was "unlawful" or
"wrongful" is a mere legal conclusion or opinion of the
pleader;
(d) the allegation that there was a violation of trust was
plainly a conclusion of law, for "a mere allegation that it
was the duty of a party to do this or that, or that he was
guilty of a breach of duty, is a statement of a conclusion,
not of a fact;"
(e) an allegation that a contract is valid or void, is a mere
conclusion of law;
(f) the averment in the complaint that "defendant usurped
the office of Senator of the Philippines" is a conclusion of
law — not a statement of fact — inasmuch as the
particular facts on which the alleged usurpation is
predicated are not set forth therein; and
(g) the averment that "with intent of circumventing the
constitutional prohibition that 'no officer or employee in
the civil service shall be removed or suspended except for
cause as provided by law', respondents maliciously and
illegally for the purpose of political persecution and
political vengeance, reverted the fund of the salary item .
. . and furthermore eliminated or abolished the said
position effective 1 July 1960" is a mere conclusion of law
unsupported by factual premises.
Dispositive:
WHEREFORE, the petition is GRANTED and the
resolutions dated 21 April 1989 and 29 May 1989 are
hereby ANNULLED and SET ASIDE. The respondents
are hereby ordered to PREPARE and FILE a Bill of
Particulars containing the facts prayed for by petitioner
within TWENTY (20) DAYS from notice, and should
they fail to submit the said Bill of Particulars, respondent
Sandiganbayan is ordered TO EXCLUDE the herein
petitioner as defendant in Civil Case No. 0035.
SO ORDERED.
D.M. FERRER & ASSOCIATES CORPORATION v.
UNIVERSITY OF SANTO TOMAS G.R. No. 189496.
February 1, 2012.
FACTS: Petitioner and University of Santo Tomas
Hospital, Inc. entered into a Project Management
Contract for the renovation of the 4th and 5thfloors of the
Clinical Division Building, Nurse Call Room and Medical
Records, Medical Arts Tower, Diagnostic Treatment
Building and Pay Division Building.
On various dates, petitioner demanded from USTHI the
payment of the construction costs amounting to
P17,558,479.39. However, UST, through its rector, Fr.
Rolando V. Dela Rosa, wrote a letter informing petitioner
that its claim for payment had been denied, because the
Project Management Contract was without the required
prior approval of the board of trustees. Thus, petitioner
filed a Complaint for sum of money, breach of contract
and damages against herein respondent UST and USTHI
when the latter failed to pay petitioner despite repeated
demands.
In impleading respondent UST, petitioner alleged that the
former took complete control over the business and
operation of USTHI, as well as the completion of the
construction project. It also pointed out that the Articles
of Incorporation of USTHI provided that, upon
dissolution, all of the latter’s assets shall be transferred
without any consideration and shall inure to the benefit of
UST. It appears that USTHI passed a Resolution
dissolving the corporation by shortening its corporate
term of existence.
Finally, petitioner alleged that respondent, through its
rector, Fr. Dela Rosa, O.P., verbally assured the former of
the payment of USTHIs outstanding obligations.
Thus, petitioner posited in part that UST may be
impleaded in the case under the doctrine of piercing the
corporate veil, wherein respondent UST and USTHI
would be considered to be acting as one corporate entity,
and UST may be held liable for the alleged obligations
due to petitioner.
Subsequently, respondent filed its Motion to Dismiss. It
alleged that the Complaint failed to state a cause of action,
and that the claim was unenforceable under the provisions
of the Statute of Frauds.
RTC Quezon City granted the motion and dismissed the
Complaint insofar as respondent UST was concerned, on
the ground that respondent was not a real party-in-
18
interest, and that it was not privy to the contract executed
between USTHI and petitioner. Second, the court pointed
out that the alleged verbal assurances of Fr. Dela Rosa
should have been in writing to make these assurances
binding and demandable.
Petitioner sought a reconsideration of the RTC Order and
asserted that only allegations of the Complaint, and not
the attached documents, should have been the basis of the
trial court’s ruling, consistent with the rule that the cause
of action can be determined only from the facts alleged in
the Complaint. It also insisted that the Statute of Frauds
was inapplicable, since USTHI’s obligation had already
been partially executed.
The Motion for Reconsideration filed by petitioner was
dimissed, upholding the initial findings that respondent
UST was not a real party-in-interest, and that Fr. Dela
Rosas alleged assurances of payment were unenforceable.
Subsequently, petitioner filed a Petition for Certiorari
under Rule 65 with the CA, alleging that the trial court
committed grave abuse of discretion when it granted
respondents Motion to Dismiss on the basis of the
documents submitted in support of the Complaint, and not
solely on the allegations stated therein. It pointed out that
the allegations raised questions of fact and law, which
should have been threshed out during trial, when both
parties would have been given the chance to present
evidence supporting their respective allegations.
CA issued the assailed Resolution and dismissed the
Petition on the ground that a petition under Rule 65 is the
wrong remedy to question the RTCs Order that
completely disposes of the case. Instead, petitioner should
have availed itself of an appeal under Rule 41 of the Rules
of Court.
Petitioner moved for a reconsideration of the Resolution,
pointing out that the present case falls under the
enumerated exceptions of Rule 41, in particular, while the
main case is still pending, no appeal may be made from a
judgment or final order for or against one or more of
several parties or in separate claims, counterclaims, cross-
claims and third-party complaints.
CA denied the Motion for Reconsideration through its
second assailed Resolution, holding that the motion raised
no new issues or substantial grounds that would merit the
reconsideration of the court.
ISSUE: (1) Whether the CA erred in dismissing the
Petition for Certiorari by failing to consider the exception
in Sec. 1(g) of Rule 41 of the Rules of Court.
(2) Whether the trial court committed grave abuse of
discretion when it held that the Complaint stated no cause
of action.
HELD: (1) Yes.A petition for certiorari under Rule 65 is
the proper remedy to question the dismissal of an action
against one of the parties while the main case is still
pending.
In Jan-Dec Construction Corp. v. Court of Appeals, the
Court ruled that the CA erred in dismissing petitioner's
petition for certiorari from the Order of the RTC
dismissing the complaint against respondent. While
Section 1, Rule 41 of the 1997 Rules of Civil Procedure
states that an appeal may be taken only from a final order
that completely disposes of the case, it also provides
several exceptions to the rule, to wit: (a) an order denying
a motion for new trial or reconsideration; (b) an order
denying a petition for relief or any similar motion seeking
relief from judgment; (c) an interlocutory order; (d) an
order disallowing or dismissing an appeal; (e) an order
denying a motion to set aside a judgment by consent,
confession or compromise on the ground of fraud,
mistake or duress, or any other ground vitiating consent;
(f) an order of execution; (g) a judgment or final order for
or against one or more of several parties or in separate
claims, counterclaims, crossclaims and third-party
complaints, while the main case is pending, unless the
court allows an appeal therefrom; and (h) an order
dismissing an action without prejudice. In the foregoing
instances, the aggrieved party may file an appropriate
special civil action for certiorari under Rule 65.
(2) Yes. In Abacan v. Northwestern University, Inc., the
Court ruled that it is settled that the existence of a cause
of action is determined by the allegations in the
complaint. In resolving a motion to dismiss based on the
failure to state a cause of action, only the facts alleged in
the complaint must be considered. The test is whether the
court can render a valid judgment on the complaint based
on the facts alleged and the prayer asked for. Indeed, the
elementary test for failure to state a cause of action is
whether the complaint alleges facts which if true would
justify the relief demanded. Only ultimate facts and not
legal conclusions or evidentiary facts, which should not
be alleged in the complaint in the first place, are
considered for purposes of applying the test.
19
While it is admitted that respondent UST was not a party
to the contract, petitioner posits that the former is
nevertheless liable for the construction costs. In support
of its position, petitioner alleged that (1) UST and USTHI
are one and the same corporation; (2) UST stands to
benefit from the assets of USTHI by virtue of the
latters Articles of Incorporation; (3) respondent controls
the business of USTHI; and (4) USTs officials have
performed acts that may be construed as an
acknowledgement of respondents liability to petitioner.
Obviously, these issues would have been best resolved
during trial. The RTC therefore committed grave abuse of
discretion when it dismissed the case against respondent
for lack of cause of action. The trial court relied on the
contract executed between petitioner and USTHI, when
the court should have instead considered merely the
allegations stated in the Complaint. La Mallorca v. Court
of Appeals, Mariano Beltran, et al. G.R. No. L-20761.
July 27, 1966.
FACTS: Private respondents (Mariano Beltran being the
husband, and his wife), with their three minor daughters
at about noontime, boarded a Pambusco Bus at San
Fernando, Pampanga. It was owned and operated by
defendant. Private respondents were carrying with them
at the time four pieces of baggage. The conductor of the
bus then issued tickets to them, except to two of the
daughters, who were below the height requirement at
which the fare was charged.When the bus reached Anao,
it stopped there to allow the passengers bound therefor to
get down. Among these were the private respondents and
their children. Private respondent husband went back to
the bus to retrieve his bayong which he left behind.
However, he did not notice that one of his daughters
followed him. When he was waiting for the conductor to
hand him the bayong, the bus started to leave without the
signal of the conductor, then it stopped
again.Nevertheless, sensing that the bus is again about to
move, private respondent husband veered away from the
same. At the same time, he noticed people gathering
around the body of a child who turned out to be his
daughter, with her skull crushed and already without life.
Thus, private respondents filed an action to recover
damages, which was granted by the trial court for breach
of contract of carriage.On appeal, the Court of Appeals
agreed that the contract of carriage had already
terminated, but still made petitioner liable on the basis of
quasi-delict.
ISSUE: Whether or not La Mallorca (petitioner) is be
liable.
HELD: Yes. Although private respondents alighted at the
designated place, insofar as the husband is concerned, the
relationship of passenger and carrier still subsisted due to
the fact that the bayong which he was supposed to claim
was still in the bus. The issue to be determined is whether
the carrier was also liable for the safety of the child. The
recognized rule is that the relation of carrier and passenger
does not automatically cease when the passenger alighted.
The latter must have had a reasonable time or opportunity
to leave the carrier’s premises. A “reasonableness” is to
be determined by the circumstances.
It must be noted that the bus did not observe a carrier’s
obligation to exercise “utmost diligence” of a “very
cautious person” when it commenced to leave without the
signal of the conductor. Also, the presence of private
respondents near the bus was not unreasonable since they
still have a part of their baggage in the bus. Thus, they are
still to be considered as passengers and entitled to
protection under the contract of carriage.
But assuming that the carrier-passenger relationship had
already ceased, petitioner may still be held liable for
negligence of its driver, which shall fall under quasi-
delict.
LA MALLORCA VS. CA
- 2 CASES SA NET. CHECK NA LANG NATIN
ANO DUN SA DALAWA
LEDDA V. BPI. G.R. NO. 200868. NOVEMBER 21,
2012.
FACTS: Anita Ledda was a client of Bank of the
Philippine Islands (BPI) who was issued a pre-approved
credit card. This credit card and its terms and conditions
were delivered to Ledda; Ledda began to subsequently
use the credit card for various purchases of goods,
services, and cash advances. Ledda defaulted in the
payment of her credit card obligations. BPI sent a demand
letter on September 26, 2007, but this was received in
Ledda on October 2, 2007 who defaulted payment
nonetheless. BPI thus filed a complaint of the collection
of a sum of money against Ledda, allegedly amounting to
P548,143.73. BPI filed the complaint in the RTC of
Makati City. The RTC declared Ledda in default for
20
failing to file an Answer within the period prescribed
despite the service of the complaint and summons. Ledda
somehow managed to file a motion for reconsideration,
which was granted by the RTC and thus allowed her to
file her Answer Ad Cautelam. Ledda and her counsel,
however, failed to appear during the Pre-Trial. BPI was
thus allowed to present evidence ex-parte. The RTC later
ruled in favor of BPI, making Ledda liable for the alleged
amount of P548,143.73 plus a 6% monthly interest. Ledda
appealed to the CA, which denied her appeal but modified
the RTC’s decision. The CA rejected Ledda’s argument
that the credit card’s terms and conditions were actionable
documents governed by Rule 8, sec. 7 of the Rules of
Civil Procedure. The CA held that BPI’s cause of action
sprang from Ledda’s availment of the bank’s credit
facilities via the credit card and her refusal to pay the
obligation it created. The CA used the case of Macalinao
vs BPI in order to reduce the payment of interest. The
Macalinao case also concerned the default in payment of
a credit card obligation, but the bank therein imposed a
9.25% interest per month penalty, amounting to 111% per
annum, which the court deemed exorbitant and
unconscionable. The CA reduced Ledda’s credit card
obligations to P322, 138 as the principal by deducting
P225,000.15 as interests and charges from the original
P548,143.73 amount. The CA also granted Attorney’s
fees to BPI as per the Macalinao case. Ledda moved to
reconsider, but was denied by the CA. Ledda went to the
SC via a petition for Review.
ISSUE: Did the CA err in holding that the credit card’s
terms and conditions were not actionable documents
under Rule 8, sec. 7 of the Rules of Civil Procedure?
HELD: No, the CA was correct in ruling that the credit
card’s terms and conditions were not actionable
documents under the Rules of Civil Procedure.
Rule 8, section 7 provides:
Section 7. Action or defense based on document. —
Whenever an action or defense is based upon a written
instrument or document, the substance of such instrument
or document shall be set forth in the pleading, and the
original or a copy thereof shall be attached to the pleading
as an exhibit, which shall be deemed to be a part of the
pleading, or said copy may with like effect be set forth in
the pleading.
As the rule itself states, the cause of action must be based
on a document to be attached to the complaint. BPI’s
cause of action, however, was not solely based on the
credit card’s terms and conditions. It was also based on
Ledda’s 1) acceptance of the credit card, 2) use of the
credit card to purchase goods or services or advances in
cash, and 3) her default in the payment of her obligations.
As such, BPI had a sufficient cause of action with or
without the attachment of the credit card’s terms and
conditions.
ASIAN CONSTRUCTION & DEVELOPMENT
CORP VS. LOURDES MENDOZA
Lourdes K. Mendoza (Mendoza), sole proprietor of
Highett Steel Fabricators (Highett), a Complaint for a sum
of money against Asian Construction and Development
Corporation (ACDC), a duly registered domestic
corporation.
Mendoza alleged that ACDC purchased from Highett
various fabricated steel materials and supplies amounting
to P1,206,177.00, exclusive of interests; that despite
demand, ACDC failed and/or refused to pay.
Petitioner moved for a bill of particulars on the ground
that no copies of the purchase orders and invoices were
attached to the complaint to enable petitioner to prepare a
responsive pleading to the complaint, which motion was
denied by the court. Accordingly, ACDC filed its Answer
with Counterclaim denying liability for the claims and
interposing the defense of lack of cause of action.
Mendoza presented the testimonies her salesman Artemio
Tejero who confirmed the delivery of the supplies and
materials to ACDC.
The presentation of evidence for petitioner, however, was
deemed waived and terminated due to the repeated non-
appearance of ACDC and counsel.
The Court ruled in favor of Mendoza, finding ACDC
liable for purchase price of the materials it ordered.
On appeal before the Supreme Court, ACDC argues that
a charge or sales invoice is not an actionable document;
thus, its failure to deny under oath its genuineness and due
21
execution does not constitute an admission thereof.
ACDC likewise insists that respondent was not able to
prove her claim as the invoices offered as evidence were
not properly authenticated by her witnesses.
ISSUE: W/N ACDC is liable for the materials ordered.
RULING: Yes.
A document is actionable when an action or defense is
grounded upon such written instrument or document. In
the instant case, the Charge Invoices are not actionable
documents per se as these only provide details on the
alleged transactions. These documents need not be
attached to or stated in the complaint as these are
evidentiary in nature. In fact, Mendoza’s cause of action
is not based on these documents but on the contract of sale
between the parties.
Although the Charge Invoices are not actionable
documents, these, along with the Purchase Orders, are
sufficient to prove that ACDC indeed ordered supplies
and materials from Highett and that these were duly
delivered.
Moreover, contrary to the claim of ACDC, the Charge
Invoices were properly identified and authenticated by
witness Tejero who was present when the supplies and
materials were delivered to ACDC and when the invoices
were stamped received by its employee.
BOSTON EQUITY RESOURCES, INC. VS. CA
Facts:
On 24 December 1997, petitioner filed a complaint for
sum of money with a prayer for the issuance of a writ of
preliminary attachment against the spouses Manuel and
Lolita Toledo. Herein respondent filed an Answer dated
19 March 1998 but on 7 May 1998, she filed a Motion for
Leave to Admit Amended Answer in which she alleged,
among others, that her husband and co-defendant, Manuel
Toledo (Manuel), is already dead. As a result, petitioner
filed a motion, dated 5 August 1999, to require respondent
to disclose the heirs of Manuel. Petitioner then filed a
Motion for Substitution, praying that Manuel be
substituted by his children as party-defendants. This
motion was granted by the trial court in an Order dated 9
October 2000.13
On 26 May 2004, the reception of evidence for herein
respondent was cancelled upon agreement of the parties.
On 24 September 2004, counsel for herein respondent
was given a period of fifteen days within which to file a
demurrer to evidence. However, on 7 October 2004,
respondent instead filed a motion to dismiss the
complaint, citing the following as grounds: (1)
**********; (2) that the trial court did not acquire
jurisdiction over the person of Manuel pursuant to Section
5, Rule 86 of the Revised Rules of Court; (3) ******
The trial court, denied the motion to dismiss for having
been filed out of time, citing Section 1, Rule 16 of the
1997 Rules of Court which Aggrieved, respondent filed
a petition to the Court of Appeals alleging that the trial
court seriously erred and gravely abused its discretion in
denying her motion. CA granted the petition.
Issue
W/N the RTC acquired jurisdiction over the dead (Manuel
Toledo) person?
Ruling: No. Jurisdiction over the person of a
defendant is acquired through a valid service of
summons; trial court did not acquire jurisdiction over
the person of Manuel Toledo.
Citing the case of Sarsaba:
“The court’s failure to acquire jurisdiction over one’s
person is a defense which is personal to the person
claiming it.Obviously, it is now impossible for Sereno to
invoke the same in view of his death.Neither can
petitioner invoke such ground, on behalf of Sereno, so
as to reap the benefit of having the case dismissed
against all of the defendants. “
CONNECTED RULING:
Here, what respondent was questioning in her motion to
dismiss before the trial court was that court’s jurisdiction
over the person of defendant Manuel. Thus, the principle
of estoppel by laches finds no application in this case.
Instead, the principles relating to jurisdiction over the
person of the parties are pertinent herein.
The Rules of Court provide:
RULE 9
EFFECT OF FAILURE TO PLEAD
Section 1. Defenses and objections not pleaded. –
Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived. However,
when it appears from the pleadings or the evidence on
22
record that the court has no jurisdiction over the subject
matter, that there is another action pending between the
same parties for the same cause, or that the action is
barred by a prior judgment or by statute of limitations, the
court shall dismiss the claim.
RULE 15
MOTIONS
Sec. 8. Omnibus motion. – Subject to the provisions of
Section 1 of Rule 9, a motion attacking a pleading, order,
judgment, or proceeding shall include all objections then
available, and all objections not so included shall be
deemed waived.
Based on the foregoing provisions, the "objection on
jurisdictional grounds which is not waived even if not
alleged in a motion to dismiss or the answer is lack of
jurisdiction over the subject matter. x x x Lack of
jurisdiction over the subject matter can always be raised
anytime, even for the first time on appeal, since
jurisdictional issues cannot be waived x x x subject,
however, to the principle of estoppel by laches."36
Since the defense of lack of jurisdiction over the person
of a party to a case is not one of those defenses which are
not deemed waived under Section 1 of Rule 9, such
defense must be invoked when an answer or a motion to
dismiss is filed in order to prevent a waiver of the
defense.37 If the objection is not raised either in a motion
to dismiss or in the answer, the objection to the
jurisdiction over the person of the plaintiff or the
defendant is deemed waived by virtue of the first sentence
of the above-quoted Section 1 of Rule 9 of the Rules of
Court.38
The Court of Appeals, therefore, erred when it made a
sweeping pronouncement in its questioned decision,
stating that "issue on jurisdiction may be raised at any
stage of the proceeding, even for the first time on appeal"
and that, therefore, respondent timely raised the issue in
her motion to dismiss and is, consequently, not estopped
from raising the question of jurisdiction. As the question
of jurisdiction involved here is that over the person of the
defendant Manuel, the same is deemed waived if not
raised in the answer or a motion to dismiss. In any case,
respondent cannot claim the defense since "lack of
jurisdiction over the person, being subject to waiver, is a
personal defense which can only be asserted by the party
who can thereby waive it by silence."39
FINANCIAL BUILDING CORPORATION,
petitioner, vs. FORBES PARK ASSOCIATION,
INC., respondent.
FACTS:
The then Union of Soviet Socialist Republic (hereafter,
USSR) was the owner of a residential lot located at Forbes
Park Village in Makati City. The USSR engaged the
services of Financial Building for the construction of a
multi-level building building at the said lot. Forbes Park
reminded the USSR of existing regulations authorizing
only the construction of a single-family residential
building in each lot within the village. It also elicited a
reassurance from the USSR that such restriction has been
complied with. Despite this, Financial Building submitted
to the Makati City Government a second building plan for
the construction of a multi-level apartment building,
which was different from the first plan for the
construction of a residential building submitted to Forbes
Park. Forbes Park discovered the second plan and
subsequent ocular inspection confirmed the violation of
the deed of restrictions. Thus, it enjoined further
construction work. Forbes Park suspended all permits of
entry for the personnel and materials of Financial
Building in the said construction site. The parties
attempted to meet to settle their differences but it did not
push through. Financial Building filed in the Regional
Trial Court of Makati, Metro Manila, a Complaint for
Injunction and Damages with a prayer for Preliminary
Injunction against Forbes Park. The latter, in turn, filed a
Motion to Dismiss on the ground that Financial Building
had no cause of action because it was not the real party-
in-interest. The trial court issued a writ of preliminary
injunction against Forbes Park but the Court of Appeals
nullified it and dismissed the complaint. The Supreme
Court affirmed the said dismissal in a Resolution. After
Financial Building’s case was terminated with finality,
Forbes Park sought to vindicate its rights by filing with
the Regional Trial Court of Makati a Complaint for
Damages, against Financial Building arising from the
violation of its rules and regulations. The trial court
rendered its decision in favor of Forbes Park. Financial
Building appealed the said decision to the Court of
Appeals, which affirmed the decision of the RTC.
ISSUE: Whether or not Forbes Park is barred in claiming
damages?
HELD: Yes. The instant case is barred due to Forbes
Park’s failure to set it up as a compulsory counterclaim in
23
the prior injunction suit initiated by Financial Building
against Forbes Park.
A compulsory counterclaim is one which arises out of or
is necessarily connected with the transaction or
occurrence that is the subject matter of the opposing
party’s claim.15 If it is within the jurisdiction of the court
and it does not require for its adjudication the presence of
third parties over whom the court cannot acquire
jurisdiction, such compulsory counterclaim is barred if it
is not set up in the action filed by the opposing party.
Thus, a compulsory counterclaim cannot be the subject of
a separate action but it should instead be asserted in the
same suit involving the same transaction or occurrence,
which gave rise to it.17 To determine whether a
counterclaim is compulsory or not, we have devised the
following tests: (1) Are the issues of fact or law raised by
the claim and the counterclaim largely the same? (2)
Would res judicata bar a subsequent suit on defendant’s
claim absent the compulsory counterclaim rule? (3) Will
substantially the same evidence support or refute
plaintiff’s claim as well as the defendant’s counterclaim?
and (4) Is there any logical relation between the claim and
the counterclaim? Affirmative answers to the above
queries indicate the existence of a compulsory
counterclaim.
Second. Since Forbes Park filed a motion to dismiss in
Civil Case No. 16540, its existing compulsory
counterclaim at that time is now barred.A compulsory
counterclaim is auxiliary to the proceeding in the original
suit and derives its jurisdictional support therefrom.19 A
counterclaim presupposes the existence of a claim against
the party filing the counterclaim. Hence, where there is no
claim against the counterclaimant, the counterclaim is
improper and it must dismissed, more so where the
complaint is dismissed at the instance of the
counterclaimant.20 In other words, if the dismissal of the
main action results in the dismissal of the counterclaim
already filed, it stands to reason that the filing of a motion
to dismiss the complaint is an implied waiver of the
compulsory counterclaim because the grant of the motion
ultimately results in the dismissal of the counterclaim.
Thus, the filing of a motion to dismiss and the setting up
of a compulsory counterclaim are incompatible remedies.
In the event that a defending party has a ground for
dismissal and a compulsory counterclaim at the same
time, he must choose only one remedy. If he decides to
file a motion to dismiss, he will lose his compulsory
counterclaim. But if he opts to set up his compulsory
counterclaim, he may still plead his ground for dismissal
as an affirmative defense in his answer.21 The latter
option is obviously more favorable to the defendant
although such fact was lost on Forbes Park.The ground
for dismissal invoked by Forbes Park was lack of cause of
action. There was no need to plead such ground in a
motion to dismiss or in the answer since the same was not
deemed waived if it was not pleaded.22 Nonetheless,
Forbes Park still filed a motion to dismiss and thus
exercised bad judgment in its choice of remedies. Thus, it
has no one to blame but itself for the consequent loss of
its counterclaim as a result of such choice.
NATIVIDAD LIM VS. NATIONAL POWER
CORPORATION, AND SPOUSES ROBERTO LL.
ARCINUE AND ARABELA ARCINUE G.R. NO.
178789. NOVEMBER 14, 2012.
FACTS:
Respondent National Power Corporation (NPC) filed an
expropriation suit against petitioner Natividad B. Lim
(Lim) before the Regional Trial Court (RTC) of
Lingayen, covering Lots 2373 and 2374 that the NPC
needed for its Sual Coal-Fired Thermal Power Project.
Since Lim was residing in the United States, the court
caused the service of summons on her through her tenant,
a certain Wilfredo Tabongbong.The RTC ordered the
issued writ of possession in NPC’s favor, however, Lim,
represented by her husband Delfin, filed an omnibus
motion to dismiss the action and to suspend the writ of
possession, questioning the RTC’s jurisdiction over
Lim’s person and the nature of the action.Respondent
spouses Roberto and Arabela Arcinue (the Arcinues) filed
a motion for leave to admit complaint in intervention,
alleging that they owned and were in possession of Lot
2374, one of the two lots subject of the expropriation. The
RTC granted the Arcinues’ motion and required both the
NPC and Lim to answer the complaint-in-intervention
within 10 days from receipt of its order.When Lim and the
NPC still did not file their answers to the complaint-in-
intervention after 10 months, the Arcinues filed a motion
for judgment by default. Lim sought to expunge the
motion on the ground that it lacked the requisite
explanation why the Arcinues resorted to service by
registered mail rather than to personal service. At the
scheduled hearing of the motion, Lim’s counsel did not
appear. The NPC for its part manifested that it did not file
an answer since its interest lay in determining who was
entitled to just compensation.The RTC issued an order of
24
default against both Lim and the NPC. The RTC pointed
out that the Arcinues’ failure to explain their resort to
service by registered mail had already been cured by the
manifestation of Lim’s counsel that he received a copy of
the Arcinues’ motion 10 days before its scheduled
hearing.Lim filed a motion for reconsideration to lift the
default order but the Court denied the motion, prompting
Lim to file a petition for certiorari before the Court of
Appeals. The CA rendered a decision that affirmed the
RTC’s order of default. Lim filed a motion for
reconsideration but the CA denied it, prompting her to file
the present petition for review.
ISSUES: (1) Whether or not there is a valid order of
default of the RTC entered against Lim.
(2) Whether or not there is grave abuse of discretion on
the part of the RTC in allowing respondent spouses’
failure to explain in their motion why they served a copy
of it on the adverse party by registered mail rather than by
personal service.
HELD: (1) No. Section 4, Rule 19 of the Rules of Civil
Procedure requires the original parties to file an answer to
the complaint-in-intervention within 15 days from notice
of the order admitting the same, unless a different period
is fixed by the court. This changes the procedure under
the former rule where such an answer was regarded as
optional.
Thus, Lim’s failure to file the required answer can give
rise to default. She remained unable to show that her
failure to file the required answer was due to fraud,
accident, mistake, or excusable negligence. And, although
she claimed that she had a meritorious defense, she was
unable to specify what constituted such defense.
(2) No. The Court finds no such grave abuse of discretion,
notwithstanding that the Arcinues' failed to explain their
resort to service by registered mail rather than by personal
service, the fact is that Lim's counsel expressly admitted
having received a copy of the Arcinues' motion for
judgment 10 days before its scheduled
hearing. This means that the Arcinues were diligent
enough to file their motion by registered mail long before
the scheduled hearing.
Personal service is required precisely because it often
happens that hearings do not push through because, while
a copy of the motion may have been served by registered
mail before the date of the hearing, such is received by the
adverse party already after the hearing. Thus, the rules
prefer personal service. But it does not altogether prohibit
service by registered mail when such service, when
adopted, ensures as in this case receipt by the adverse
party.
MAGDIWANG REALTY CORPORATION,
RENATO P. DRAGON and ESPERANZA
TOLENTINO, Petitioners, vs. THE MANILA
BANKING CORPORATION, substituted by FIRST
SOVEREIGN ASSET MANAGEMENT (SPV-AMC),
INC., Respondent. G.R. No. 195592. September 5,
2012.
FACTS: The case stems from a complaint for sum of
money filed on April 18, 2000 before the Regional Trial
Court (RTC), Makati City by herein respondent, The
Manila Banking Corporation (TMBC), against herein
petitioners, Magdiwang Realty Corporation
(Magdiwang), Renato P. Dragon (Dragon) and Esperanza
Tolentino (Tolentino), after said petitioners allegedly
defaulted in the payment of their debts under the five
promissory notes they executed in favor of TMBC, which
contained the following terms:
Promissory Note No. 4953 December 27, 1976 (Maturity
Date) Php500,000.00 (Amount)
Promissory Note No. 10045 March 27, 1982 (Maturity
Date) Php500,000.00 (Amount)
Promissory Note No. 10046 March 27, 1982 (Maturity
Date) Php500,000.00 (Amount)
Promissory Note No. 10047 March 27, 1982 (Maturity
Date) Php500,000.00 (Amount)
Promissory Note No. 10048 March 27, 1982 (Maturity
Date) Php500,000.00 (Amount)
All promissory notes included stipulations on the
payment of interest and additional charges in case of
default by the debtors. Despite several demands for
payment made by TMBC, the petitioners allegedly failed
to heed to the bank’s demands, prompting the filing of the
complaint for sum of money.
Instead of filing a responsive pleading with the trial court,
the petitioners filed on October 12, 2000, which was
notably beyond the fifteen (15)-day period allowed for the
filing of a responsive pleading, a Motion for Leave to
Admit Attached Motion to Dismiss5 and a Motion to
Dismiss, raising therein the issues of novation, lack of
25
cause of action against individuals Dragon and Tolentino,
and the impossibility of the novated contract due to a
subsequent act of the Congress.
The motions were opposed by the respondent TMBC, via
its Opposition which likewise asked that the petitioners be
declared in default for their failure to file their responsive
pleading within the period allowed under the law.
RTC Order – Declared the petitioners in default.
While this Court appreciates the efforts and tenacity
shown by defendants’ counsel for having prepared a
lengthy pleading for his clients in so short a time, the
Court will have to rule that the Motion to Dismiss was
nonetheless filed out of time, hence, there is sufficient
basis to declare defendants in default.
The petitioners’ motion for reconsideration was denied by
the trial court in its Order dated August 2, 2005. The ex
parte presentation of evidence by the bank before the trial
court’s Presiding Judge was scheduled in the same
Order.Unsatisfied with the RTC orders, the petitioners
filed with the CA a petition for certiorari.CA Ruling on
RTC’s Order of Default – Affirmed RTC’s order of
default, holding that the RTC did not commit grave abuse
of discretion when it declared herein petitioners in default.
The denial of petitioners’ motion for reconsideration
prompted the filing of a petition for review on certiorari
before this Court, which, through its Resolutions dated
March 5, 2008 and June 25, 2008, denied the petition for
lack of merit.In the meantime, TMBC’s presentation of
evidence ex parte proceeded before Presiding Judge
Oscar B. Pimentel of the RTC of Makati City.
RTC ruled in favor of TMBC (May 20, 2007).
Petitioner’s motion for reconsideration was denied by the
trial co urt, hence, it filed an appeal with the
CA.
While appeal was pending before the appellate court,
TMBC and First Sovereign Asset Management
(SPVAMC), Inc. (FSAMI) filed a Joint Motion for
Substitution, asking that TMBC be substituted by FSAMI
after the former executed in favor of the latter a Deed of
Assignment covering all of its rights, title and interest
over the loans subject of the case.
CA Ruling – Dismissed the petitioner’s appeal (October
11, 2010) and AFFIRMED RTC’s decision.
On the issue of prescription, the CA cited the rule that the
prescriptive period is interrupted in any of the following
instances: (1) when an action is filed before the court; (2)
when there is a written extrajudicial demand by the
creditors; and (3) when there is any written
acknowledgment of the debt by the debtor.
The prescriptive period was legally interrupted on
September 19, 1984 when the defendants-appellants,
through several letters, proposed for the restructuring of
their loans until the plaintiff-appellee sent its final
demand letter on September 10, 1999. Indeed, the period
during which the defendants-appellants were seeking
reconsideration for the non-settlement of their loans and
proposing payment schemes of the same should not be
reckoned against it. When prescription is interrupted, all
the benefits acquired so far from the lapse of time cease
and, when prescription starts anew, it will be entirely a
new one.
This concept should not be equated with suspension
where the past period is included in the computation being
added to the period after prescription is resumed.
Consequently, when the plaintiff-appellee sent its final
demand letter to the defendants appellants, thus,
foreclosing all possibilities of reaching a settlement of the
loans which could be favorable to both parties, the period
of ten years within which to enforce the five promissory
notes under Article 1142 of the New Civil Code began to
run again and, therefore, the action filed on April 18, 2000
to compel the defendants-appellants to pay their
obligations under the promissory notes had not
prescribed.
The defense of novation was also rejected by the CA,
citing the absence of two requirements for a valid
novation, namely: (1) the clear and express release of the
original debtor from the obligation upon the assumption
by the new debtor of the obligation; and (2) the consent
of the creditor thereto.
ISSUES: (1) Whether or not the prescriptive period was
legally interrupted on September 19, 1984 when
petitioners proposed restructuring of their loans.
(2) Whether or not the principle of novation by the
substitution of debtors was erroneously employed by the
petitioners to extricate themselves from the obligation to
the respondent.
HELD: (1) Yes. The ten (10)-year prescriptive period to
file an action based on the subject promissory notes was
interrupted by the several letters exchanged between the
26
parties. This is in conformity with the second and third
circumstances under Article 1155 of the New Civil Code
(NCC) which provides that the prescription of actions is  Ong filed with the Regional Trial Court a motion
interrupted when: (1) they are filed before the court; (2) to declare the Spouses Manuel in default.
there is a written extrajudicial demand by the creditors; o Sheriff Joselito Sales attempted to
and (3) there is any written acknowledgment of the debt personally serve summons on the
by the debtor. In TMBC’s complaint against the Spouses Manuel at their address in
petitioners, the bank sufficiently made the allegations on Lower Bacong, Loacan, Itogon, Benguet.
its service and the petitioners’ receipt of the subject
demand letters, even attaching thereto copies thereof for o Spouses Manuel, however, requested that
the trial court’s consideration. service be made at another time
considering that petitioner Sandra
During the bank’s presentation of evidence ex parte, the Manuel's mother was then critically ill.
testimony of witness Mr. Megdonio Isanan was also
offered to further support the claim on the demand made o Sheriff Sales made another attempt at
by the bank upon the petitioners. In the absence of a personal service to petitioner Sandra
timely objection from the petitioners on these claims, no Manuel but she refused to sign and
error can be imputed on the part of the trial court, and even receive the summons and the complaint.
the appellate court, in taking due consideration thereof. Sheriff Sales was thus prompted to
merely tender the summons.
As against the bare denial belatedly made by the
petitioners of their receipt of the written extrajudicial o As the Spouses Manuel failed to file their
demands made by TMBC, especially of the letter of answer within the required 15-day
September 10, 1999 which was the written demand sent period, Ong asked that they be declared
closest in time to the institution of the civil case, the in default.
appreciation of evidence and pronouncements of the trial
 RTC: issued an order granting Ong's motion to
court in its Order dated November 5, 2007 shall stand.
declare the Spouses Manuel in default. RTC also
In addition to these, we take note that letters prior to the granted motion for ex parte presentation of
letter of September 1999 also form part of the case evidence.
records, and the existence of said letters were not directly
 Spouses Manuel filed a motion to lift the order of
denied by the petitioners.
default.
(2) No. No evidence was presented to adequately establish
o They claimed that it is the siblings of
that such novation ensued. What the letters being invoked
petitioner Sandra Manuel who resided in
by the petitioners as supposedly establishing novation
Lower Bacong, Itogon, Benguet so
only indicate that efforts on a repayment scheme were
summons could not have been properly
exerted by the parties. However, nowhere in the records
served on them in the former address.
is it indicated that such novation ever materialized.
 RTC: denied motion to lift order of default.
ISSUE: W/N the Spouses Manuel may be granted
SPOUSES MANUEL VS ONG
relief from the order of default? NO.
Facts:
RULING:
 Respondent Ramon Ong (Ong) filed with the
The requisites for declaring a party in default were
Regional Trial Court of La Trinidad, Benguet a
satisfied by respondent Ong.
complaint for accion reivindicatoria. Ong
charged the Spouses Manuel with having 1) the claiming party must file a motion asking the
constructed improvements — through force, court to declare the defending party in default;
intimidation, strategy, threats, and stealth — on a
property he supposedly owned. 2) the defending party must be notified of the
motion to declare him in default;
27
 3) the claiming party must prove that the defending
party has failed to answer within the period
provided by the Rule."
It is not disputed that Ong filed a motion to declare the
Spouses Manuel in default. It is also not disputed that the
latter filed their answer after the fifteen-day period had
lapsed. It is similarly settled that the Spouses Manuel
were notified that a motion to declare them in default had
been filed.
Not only were the requisites for declaring a party in
default satisfied, the Spouses Manuel’s motion to lift
order of default was also shown to be procedurally infirm.
To lift the order of default, there are 3 requirements:
1.) the motion to lift order of default
2.) an affidavit showing the invoked ground - fraud,
accident, mistake or excusable negligence
3.) the party's meritorious defense or defenses
In this case, the Court of Appeals noted that the Spouses
Manuel’s motion to lift order of default was not made
under oath. We add that this motion was not accompanied
by an affidavit of merit specifying the facts which would
show that their non-filing of an answer within fifteen (15)
days from March 16, 2010 was due to fraud, accident,
mistake, or excusable negligence.
Failing both in making their motion under oath and in
attaching an affidavit of merits, the Spouses Manuel’s
motion to lift order of default must be deemed pro-forma.
It is not even worthy of consideration.
PHILIPPINE TOURISM AUTHORITY VS.
PHILIPPINE GOLF DEVELOPMENT &
EQUIPTMENT. G.R. NO. 176628. MARCH 19, 2012.
FACTS:
The case at bar is a petition for Certiorari under Rule 65
of the 1997 Rules of Civil Procedure, to annul the decision
of the CA in which it dismissed the petition for annulment
of judgment which sought to set aside the decision of the
RCT Muntinlupa City. The said RTC held that the
Philippine Tourism Authority (PTA) liable for its unpaid
obligation to Philippine Golf Development & Equipment,
Inc. (PHILGOLF).
PTA, an agency of the Department of Tourism, whose
main function is to bolster and promote tourism, entered
into a contract with Atlantic Erectors, Inc. (AEI) for the
construction of the Intramuros Golf Course Expansion
Projects for a contract price of P57,954,647.94. The civil
works of the project commenced. Since AEI was
incapable of constructing the golf course aspect of the
project, it entered into a sub-contract agreement with
PHILGOLF, a duly organized domestic corporation, to
build the golf course amounting to P27,000,000.00. The
sub-contract agreement also provides that PHILGOLF
shall submit its progress billings directly to PTA and, in
turn, PTA shall directly pay PHILGOLF.
PHILGOLF filed a collection suit against PTA amounting
to P11,820,550.53, plus interest, for the construction of
the golf course. Within the period to file a responsive
pleading, PTA filed a motion for extension of time to file
an answer. The RTC granted the motion for extension of
time. PTA filed another motion for extension of time to
file an answer. The RTC again granted the motion.
RTC Muntinlupa City Despite the RTCs liberality of
granting two successive motions for extension of time,
PTA failed to answer the complaint. Thus, the RTC
rendered a judgment of default ruling in favor of the
defendant which ordered the defendant to pay the plaintiff
the said outstanding obligation plus interest of 12% per
annum, attorney’s fees, cost of litigation, moral damages,
nominal damages and exemplary damages.
Court of Appeals PTA seasonably appealed the case to the
CA. But before the appeal of PTA could be perfected,
PHILGOLF already filed a motion for execution pending
appeal with the RTC. The RTC granted the motion and a
writ of execution pending appeal was issued against PTA.
A notice of garnishment was issued against PTAs bank
account at the LBP NAIA-BOC Branch to fully satisfy the
judgment. PTA filed a petition for certiorari with the CA,
imputing grave abuse of discretion on the part of the RTC
for granting the motion for execution pending appeal. The
CA ruled in favor of PTA and set aside the order granting
the motion for execution pending appeal.
PTA withdrew its appeal of the RTC decision and,
instead, filed a petition for annulment of judgment under
Rule 47 of the Rules of Court. The petition for annulment
of judgment was premised on the argument that the gross
negligence of PTAs counsel prevented the presentation of
evidence before the RTC. CA dismissed the petition for
annulment of judgment for lack of merit. PTA questions
this CA action in the present petition for certiorari.
28
ISSUES: (1) Whether or not the negligence of the PTAs
counsel amounted to an extrinsic fraud warranting an
annulment of judgment.
(2) Whether or not that since PTA is a government entity,
it should not be bound by the inactions or negligence of
its counsel.
(3) Whether or not a petition for annulment of judgment
is a proper remedy.
HELD:
The Rules of Court specifically provides for deadlines in
actions before the court to ensure an orderly disposition
of cases. PTA cannot escape these legal technicalities by
simply invoking the negligence of its counsel. This
practice, if allowed, would defeat the purpose of the Rules
on periods since every party would merely lay the blame
on its counsel to avoid any liability. The rule is that a
client is bound by the acts, even mistakes, of his counsel
in the realm of procedural technique,and unless such acts
involve gross negligence that the claiming party can
prove, the acts of a counsel bind the client as if it had been
the latters acts
(1) No. Extrinsic fraud refers to any fraudulent act of the
prevailing party in the litigation which is committed
outside of the trial of the case, whereby the unsuccessful
party has been prevented from exhibiting fully his case,
by fraud or deception practiced on him by his opponent.
Under the doctrine of this cited case, we do not see the
acts of PTAs counsel to be constitutive of extrinsic fraud.
The records reveal that the judgment of default was sent
via registered mail to PTAs counsel. However, PTA never
availed of the remedy of a motion to lift the order of
default. Since the failure of PTA to present its evidence
was not a product of any fraudulent acts committed
outside trial, the RTC did not err in declaring PTA in
default.
(2) No. PTA was acting in a proprietary character. PTA
also erred in invoking state immunity simply because it is
a government entity. The application of state immunity is
proper only when the proceedings arise out of sovereign
transactions and not in cases of commercial activities or
economic affairs. The State, in entering into a business
contract, descends to the level of an individual and is
deemed to have tacitly given its consent to be sued. Since
the said project partakes of a proprietary character entered
into between PTA and PHILGOLF, PTA cannot avoid its
financial liability by merely invoking immunity from suit.
(3) No. Annulment of Judgment is not the proper remedy.
PTAs appropriate remedy was only to appeal the RTC
decision. Annulment of Judgment under Rule 47 of the
Rules of Court is a recourse equitable in character and
allowed only in exceptional cases where the ordinary
remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no
fault of petitioner. In this case, appeal was an available
remedy. There is no extraordinary reason for a petition for
annulment of judgment, nor was there any adequate
explanation on why the remedy for new trial or petition
for relief could not be used. The Court is actually at a loss
why PTA had withdrawn a properly filed appeal and
substituted it with another petition, when PTA could have
merely raised the same issues through an ordinary appeal.
Lastly, a special civil action under Rule 65 of the Rules of
Court is only available in cases when a tribunal, board or
officer exercising judicial or quasi-judicial functions has
acted without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law. It is
not a mode of appeal, and cannot also be made as a
substitute for appeal. It will not lie in cases where other
remedies are available under the law.
In sum, PTA had the remedy of appealing the RTC
decision to the CA and, thereafter, to the Court. Under the
circumstances, the Court find no adequate reason to
justify the elevation of this case to the CA and then to the
Court, under Rule 65 of the Rules of Court.
LETICIA DIONA, REPRESENTED BY HER
ATTORNEY-IN-FACT, MARCELINA DIONA, VS.
ROMEO A. BALANGUE, SONNY A. BALANGUE,
REYNALDO A. BALANGUE, AND ESTEBAN A.
BALANGUE, JR. G.R. NO. 173559. JANUARY 7,
2013.
FACTS:
The great of a relief neither sought by the party in whose
favor it was given not supported by the evidence
presented violates the opposing party’s right to due
process and may be declared void ab initio in a proper
proceeding.Petitioner filed a Petition for Review on
Certiorari assailing the resolution granting the Petition for
Annulment of Judgment filed by the respondents seeking
to nullify that portion of the Regional Trial Court (RTC),
Branch 75, Valenzuela City awarding petitioner 5%
29
monthly interest rate for the principal amount of the loan
respondent obtained from her. The Petition likewise
assails the CA’s Resolution denying petitioner’s Motion
for Reconsideration.
In 1991, respondents obtained a loan of P45,000.00 from
petitioner payable in six months and secured by a Real
Estate Mortgage over their property located in Marulas,
Valenzuela. When the debt became due, respondents
failed to pay notwithstanding demand. Thus, petitioner
filed with the RTC a Complaint praying that respondents
be ordered to pay the principal obligation, the damages,
attorney’s fees, and to issue a decree of foreclosure for the
sale at public auction of the aforementioned parcel of
land.
Respondents were served with summons thru respondent
Sonny A. Balangue (Sonny). With the assistance of Atty.
Arthur C. Coroza (Atty. Coroza) of the Public Attorney’s
Office, they filed a Motion to Extend Period to Answer.
Despite the requested extension, however, respondents
failed to file any responsive pleadings. Thus, upon motion
of the petitioner, the RTC declared them in default and
allowed petitioner to present her evidence ex parte.
RTC decided in favour of the petitioner, ordering the
respondents to pay the petitioner, among others, the sum
of FORTY FIVE THOUSAND (P45,000.00) PESOS,
representing the unpaid principal loan obligation plus
interest at 5% per month.
Subsequently, petitioner filed a Motion for Execution,
alleging that respondents did not interpose a timely
appeal. However, respondents filed a Motion to Set Aside
Judgment dated January 26, 2001, claiming that not all of
them were duly served with summons and that they had
no knowledge of the case because their co-respondent
Sonny did not inform them about it. They prayed that the
RTC’s Decision be set aside and a new trial be conducted.
RTC ordered the issuance of a Writ of Execution. In order
to satisfy the writ, petitioner moved for the public auction
of the mortgaged property, which the RTC granted. The
property was sold in her favour for P420,000.00.
Respondents filed a Motion to Correct/Amend Judgment
and To Set Aside Execution Sale, claiming that the parties
did not agree in writing on any rate of interest and that
petitioner merely sought for a 12% per annum interest in
her Complaint. Surprisingly, the RTC awarded 5%
monthly interest (or 60% per annum) which increased
their indebtedness from P124,400.00 to P652,000.00.
RTC granted respondents’ motion and accordingly
modified the interest rate awarded from 5% monthly to
12% per annum. Then, respondents deposited the total
amount of P126,650.00.
Petitioner elevated the matter to the CA via a Petition for
Certiorari under Rule 65 of the Rules of Court. CA
declared that the RTC exceeded its jurisdiction in
awarding the 5% monthly interest but at the same time
pronouncing that the RTC gravely abused its discretion in
subsequently reducing the rate of interest to 12% per
annum. Furthermore, the court held that the proper
remedy is not to amend the judgment but to declare that
portion as a nullity. Void judgment for want of
jurisdiction is no judgment at all, it cannot be the source
of any right nor the creator of any obligation, and no legal
rights can emanate from it. CA annulled the said order.
Respondents filed with the CA a Petition for Annulment
of Judgment and Execution Sale with Damages,
contending that the portion of the RTC Decision granting
petitioner 5% monthly interest rate is in gross violation of
Section 3(d) of Rule 9 of the Rules of Court and of their
right to due process. According to respondents, the loan
did not carry any interest. Ruling of the Court of Appeals.
Initially, the CA denied due course to the Petition. Upon
respondents’ motion, it reinstated and granted the Petition
and set aside portions of the RTC’s Decision. The CA
ruled that aside from being unconscionably excessive, the
monthly interest rate of 5% was not agreed upon by the
parties and that petitioner’s Complaint clearly sought only
the legal rate of 12% per annum. Following the mandate
of Section 3(d) of Rule 9 of the Rules of Court, the CA
concluded that the awarded rate of interest is void for
being in excess of the relief sought in the Complaint.
Petitioner’s motion for reconsideration was denied by the
CA.
ISSUE: Whether or not the CA erred when it granted
respondents’ petition for annulment of judgment of the
decision of the RTC despite the fact that said decision has
become final and already executed contrary to the
Doctrine of Immutability of Judgment.
HELD: No. The award of 5% monthly interest violated
respondent’s right to due process and, hence, the same
may be set aside in a Petition for Annulment of Judgment
filed under Rule 47 of the Rules of Court.
A Petition for Annulment of Judgment under Rule 47 of
the Rules of Court is a remedy granted only under
exceptional circumstances where a party, without fault on
30
his part, has failed to avail of the ordinary remedies of refute and present controverting evidence as they were
new trial, appeal, petition for relief or other appropriate made to believe that the complainant petitioner was
remedies. Said rule explicitly provides that it is not seeking for what she merely stated in her Complaint.
available as a substitute for a remedy which was lost due
Neither can the grant of the 5% monthly interest be
to the party’s own neglect in promptly availing of the
considered subsumed by petitioner’s general prayer for
same. "The underlying reason is traceable to the notion
"other reliefs and remedies just and equitable under the
that annulling final judgments goes against the grain of
premises x x x." To repeat, the court’s grant of relief is
finality of judgment. Litigation must end and terminate
limited only to what has been prayed for in the Complaint
sometime and somewhere, and it is essential to an
or related thereto, supported by evidence, and covered by
effective administration of justice that once a judgment
the party’s cause of action. Besides, even assuming that
has become final, the issue or cause involved therein
the awarded 5% monthly or 60% per annum interest was
should be laid to rest."
properly alleged and proven during trial, the same remains
While under Section 2, Rule 47 of the Rules of Court a unconscionably excessive and ought to be equitably
Petition for Annulment of Judgment may be based only reduced in accordance with applicable jurisprudence.
on the grounds of extrinsic fraud and lack of jurisdiction,
Respondents’ former counsel was grossly negligent in
jurisprudence recognizes lack of due process as additional
handling the case of his clients; respondents did not lose
ground to annul a judgment. Grant of 5% monthly interest
ordinary remedies of new trial, petition for relief, etc.
is way beyond the 12% per annum interest sought in the
through their own fault. Ordinarily, the mistake,
Complaint and smacks of violation of due process. It is
negligence or lack of competence of counsel binds the
settled that courts cannot grant a relief not prayed for in
client. A recognized exception to the rule is when the
the pleadings or in excess of what is being sought by the
lawyers were grossly negligent in their duty to maintain
party. Due process considerations require that judgments
their client’s cause and such amounted to a deprivation of
must conform to and be supported by the pleadings and
their client’s property without due process of law. In
evidence presented in court. It is improper to enter an
which case, the courts must step in and accord relief to a
order which exceeds the scope of relief sought by the
client who suffered thereby. Had the counsel carefully
pleadings, absent notice which affords the opposing party
read the judgment it would have caught his attention and
an opportunity to be heard with respect to the proposed
compelled him to take the necessary steps to protect the
relief. The fundamental purpose of the requirement that
interest of his client. But he did not. Judging from how
allegations of a complaint must provide the measure of
respondents’ former counsel handled the cause of his
recovery is to prevent surprise to the defendant. The
clients, there is no doubt that he was grossly negligent in
reason behind Section 3(d), Rule 9 of the Rules of Court
protecting their rights, to the extent that they were
is to safeguard defendant’s right to due process against
deprived of their property without due process of law.
unforeseen and arbitrarily issued judgment. This is akin
to the very essence of due process. It embodies "the The Court is appalled by petitioner’s invocation of the
sporting idea of fair play" and forbids the grant of relief doctrine of immutability of judgment. Petitioner does not
on matters where the defendant was not given the contest as she even admits that the RTC made a glaring
opportunity to be heard thereon. mistake in awarding 5% monthly interest. Amazingly, she
wants to benefit from such erroneous award. The Court
In the case at bench, the award of 5% monthly interest rate
cannot allow this injustice to happen.
is not supported both by the allegations in the pleadings
and the evidence on record. The Real Estate Mortgage
executed by the parties does not include any provision on
interest. Clearly, the RTC’s award of 5% monthly interest ARQUERO VS. CA
or 60% per annum lacks basis and disregards due process. Facts:
It violated the due process requirement because
respondents were not informed of the possibility that the On October 2, 2003, petitioner filed the Petition for Quo
RTC may award 5% monthly interest. They were Warranto with Prayer for Issuance of Temporary
deprived of reasonable opportunity to Restraining Order and/or Injunctive Writ before the RTC
of Palawan against public and private respondents. The
case was docketed as Civil Case No. 3854.Petitioner

31
argued that the designation of private respondent deprived
her of her right to exercise her function and perform her
duties in violation of her right to security of tenure.
Considering that petitioner was appointed in a permanent
capacity, she insisted that private respondent’s
designation as OIC of the PNS is null and void there being
no vacancy to the position. Petitioner thus prayed that the
RTC issue an order granting the writ of quo warranto
enjoining private respondent from assuming the position
of OIC of the PNS, declaring the questioned designation
null and void and without operative effect, and declaring
petitioner to be entitled to the office of the principal of the
PNS.
RULING:
Petitioner insists that respondents could not have
appealed the RTC decision having been declared in
default. She explains that the only issue that could have
been raised is a purely legal question, therefore, the appeal
should have been filed with the Court and not with the
CA.
In Martinez v. Republic,[37] the Court has clearly
discussed the remedies of a party declared in default in
light of the 1964 and 1997 Rules of Court and a number
of jurisprudence applying and interpreting said rules.
Citing Lina v. Court of Appeals,[38] the Court enumerated
the above-mentioned remedies, to wit:
a) The defendant in default may, at any time after
discovery thereof and before judgment, file a motion,
under oath, to set aside the order of default on the ground
that his failure to answer was due to fraud, accident,
mistake or excusable neglect, and that he has meritorious
defenses; (Sec. 3, Rule 18)
b) If the judgment has already been rendered when the
defendant discovered the default, but before the same has
become final and executory, he may file a motion for new
trial under Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the
judgment has become final and executory, he may file a
petition for relief under Section 2 of Rule 38; and
d) He may also appeal from the judgment rendered
against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has
been presented by him. (Sec. 2, Rule 41)[39]
The Court explained in Martinez that the fourth remedy,
that of appeal, is anchored on Section 2, Rule 41 of the
1964 Rules. Even after the deletion of that provision
under the 1997 Rules, the Court did not hesitate to
expressly rely on the Lina doctrine, including the
pronouncement that a defaulted defendant may appeal
from the judgment rendered against him. Moreover,
in Rural Bank of Sta. Catalina v. Land Bank of the
Philippines,[40] the Court provided a comprehensive
restatement of the remedies of the defending party
declared in default:
It bears stressing that a defending party declared in default
loses his standing in court and his right to adduce
evidence and to present his defense. He, however, has the
right to appeal from the judgment by default and assail
said judgment on the ground, inter alia, that the amount
of the judgment is excessive or is different in kind from
that prayed for, or that the plaintiff failed to prove the
material allegations of his complaint, or that the decision
is contrary to law. Such party declared in default is
proscribed from seeking a modification or reversal of the
assailed decision on the basis of the evidence submitted
by him in the Court of Appeals, for if it were otherwise,
he would thereby be allowed to regain his right to adduce
evidence, a right which he lost in the trial court when he
was declared in default, and which he failed to have
vacated. In this case, the petitioner sought the
modification of the decision of the trial court based on the
evidence submitted by it only in the Court of Appeals.[41]
Undoubtedly, a defendant declared in default retains the
right to appeal from the judgment by default on the
ground that the plaintiff failed to prove the material
allegations of the complaint, or that the decision is
contrary to law, even without need of the prior filing of a
motion to set aside the order of default except that he does
not regain his right to adduce evidence.[42] The appellate
court, in turn, can review the assailed decision and is not
precluded from reversing the same based solely on the
evidence submitted by the plaintiff.
BENGUET ELECTRIC COOPERATIVE, INC. VS.
NLRC
Subject: The date of actual receipt by the court, and not
the date of delivery to the private carrier, is deemed the
date of filing of the pleading; 10-day reglementary period
to perfect an appeal is mandatory and jurisdictional in
nature; Suspension and termination of services imposed
by the Board members upon Cosalan was illegal;
Corporate officers and directors are not personally liable
for consequences of their corporate acts unless they act
32
with malice and bad faith; Section 31 of the Corporation
Code is applicable to cooperatives; Board members
solidarily liable with Beneco for the monetary award;
Beneco has right to be reimbursed by the Board members
for any amount it is compelled to pay
Facts:
Peter Cosalan was the General Manager of Benguet
Electric Cooperative, Inc. (Beneco), having been elected
as such by the Board of Directors of Beneco, effective
October 16, 1982.
Cosalan received two Audit Memorandums (No. 1 and 2)
issued by the Commission on Audit (COA). These
Memorandums noted that the audit and treatment of cash
advances, per diems and allowances received by officers
and employees of Beneco were not in compliance with the
guidelines of the National Electrification Administration
(NEA). The Audit Memorandums directed the taking of
immediate remedial action in conformity with existing
NEA regulations.
Cosalan initiated implementation of the remedial
measures recommended by the COA. The members of the
Board of Beneco reacted by adopting a series of
resolutions during the period from 23 June to 24 July
1984. These Board Resolutions abolished the housing and
other allowances of Cosalan, reduced his salary and struck
his name out as a principal signatory to transactions of
Beneco.
The Beneco Board adopted another series of resolutions
which resulted in the ouster of Cosalan as General
Manager as well as the withholding of his salary and
allowances.
Cosalan nevertheless continued to work as General
Manager of Beneco, in the belief that he could be
suspended or removed only by duly authorized officials
of NEA, in accordance with provisions of P.D. No. 269,
as amended by P.D. No. 1645 (NEA Charter).
Accordingly, on 5 October and 10 November 1984,
Cosalan requested Beneco to release the compensation
due him. Beneco, acting through its Board members,
denied the written request of Cosalan.
Cosalan then filed a complaint with the National Labor
Relations Commissions (NLRC) against members of the
Beneco Board, challenging the legality of the Board
resolutions which ordered his suspension and termination
from the service and demanding payment of his salaries
and allowances.
In the course of the proceedings before the Labor Arbiter,
Cosalan filed a motion for reinstatement which was
granted. Beneco complied with the Labor Arbiter's order
through Resolution No. 10-90.
The Labor Arbiter rendered a decision (a) confirming
Cosalan's reinstatement; (b) ordering payment to Cosalan
of his backwages and allowances by Beneco and the
Board members, jointly and severally, for a period of
three (3) years without deduction, and (3) ordering the
individual Board members to pay, jointly and severally,
to Cosalan moral damages of P50,000 plus attorney's fees
of ten percent (10%) of the award.
The Board members appealed to the NLRC. However,
petitioner Beneco did not appeal, but moved to dismiss
the appeal filed by the Board members and for execution
of judgment. By this time, petitioner Beneco had a new
set of directors.
The NLRC modified the award rendered by the Labor
Arbiter by declaring that petitioner Beneco alone, and not
the Board members, was liable for Cosalan's backwages
and allowances, and by ruling that there was no legal basis
for the award of moral damages and attorney's fees made
by the Labor Arbiter.
In the present Petition for Certiorari, Beneco (through its
new set of directors), allege that the NLRC had acted with
grave abuse of discretion amounting to lack of jurisdiction
when (a) it gave due course to the Board members' appeal
although such appeal had been filed out of time, and (b) it
held Beneco alone liable for payment of the backwages
and allowances due to Cosalan and releasing the Board
members from liability therefor.
Held:
The date of actual receipt by the court, and not the date of
delivery to the private carrier, is deemed the date of filing
of the pleading
1. Beneco Board members received the decision of the
Labor Arbiter on 21 April 1988. Accordingly, and
because 1 May 1988 was a legal holiday, they had only
up to 2 May 1988 within which to perfect their appeal by
filing their memorandum on appeal. The Board members'
memorandum on appeal was posted by registered mail on
3 May 1988 and received by the NLRC the following day.
Clearly, the memorandum on appeal was filed out of time.
2. The Board members insist that their Memorandum on
Appeal was filed on time because it was delivered for
mailing on May 1, 1988 to the Garcia Communications
33
Company, a licensed private letter carrier. The Board
members in effect contend that the date of delivery to
Garcia Communications was the date of filing of their
appeal memorandum.
3. The established rule is that transmission through a
private carrier or letter-forwarded - instead of the
Philippine Post Office - is not a recognized mode of filing
pleadings. The established rule is that the date of delivery
of pleadings to a private letter-forwarding agency is not
to be considered as the date of filing thereof in court, and
that in such cases, the date of actual receipt by the court,
and not the date of delivery to the private carrier, is
deemed the date of filing of the pleading.
10-day reglementary period to perfect an appeal is
mandatory and jurisdictional in nature
4. There was no reason grounded upon substantial justice
and the prevention of serious miscarriage of justice that
might have justified the NLRC in disregarding the ten-day
reglementary period for perfection of an appeal by the
Board members. Accordingly, the applicable rule was that
the ten-day reglementary period to perfect an appeal is
mandatory and jurisdictional in nature, that failure to file
an appeal within the reglementary period renders the
assailed decision final and executory and no longer
subject to review. The Board members had thus lost their
right to appeal from the decision of the Labor Arbiter and
the NLRC should have forthwith dismissed their appeal
memorandum. Suspension and termination of services
imposed by the Board members upon Cosalan was illegal
5. The appeal was likewise quite bereft of merit. Both the
Labor Arbiter and the NLRC had found that the indefinite
suspension and termination of services imposed by the
Board members upon Cosalan was illegal.
| Page 3 of 4
6. First, the suspension of Cosalan was continued long
after expiration of the period of thirty (30) days, which is
the maximum period of preventive suspension that could
be lawfully imposed under Section 4, Rule XIV of the
Omnibus Rules Implementing the Labor Code.
7. Second, Cosalan had been deprived of procedural due
process by the Board members. He was never informed of
the charges raised against him and was given no
opportunity to meet those charges and present his side of
whatever dispute existed; he was kept totally in the dark
as to the reason or reasons why he had been suspended
and effectively dismissed from the service of Beneco.
8. Third, the Board members failed to adduce any cause
which could reasonably be regarded as lawful cause for
the suspension and dismissal of Cosalan from his position
as General Manager of Beneco. Cosalan was, in other
words, denied due process both procedural and
substantive.
9. Fourth, the Board members failed to obtain the prior
approval of the NEA of their suspension and dismissal of
Cosalan, which prior approval was required under the
subsisting loan agreement between the NEA and Beneco.
The requisite NEA approval was subsequently sought by
the Board members but no NEA approval was granted.
SALVADOR O. MOJAR, ET AL VS. AGRO
COMMERCIAL SECURITY SERVICE AGENCY,
INC
FACTS:
Petitioners were employed as security guards by
respondent and assigned to the various branches of the
Bank of Commerce in Pangasinan, La Union and Ilocos
Sur.
In separate Office Orders dated 23 and 24 May 2002,
petitioners were relieved from their respective posts and
directed to report to their new assignments in Metro
Manila effective 3 June 2002. They, however, failed to
report for duty in their new assignments, prompting
respondent to send them a letter dated 18 June 2002. It
required a written explanation why no disciplinary action
should be taken against them, but the letter was not
heeded.
On 15 February 2005, petitioners filed a Complaint for
illegal dismissal against respondent and the Bank of
Commerce, Dagupan Branch, before the National Labor
Relations Commission (NLRC). Petitioners claimed,
among others, that their reassignment was a scheme to
sever the employer-employee relationship and was done
in retaliation for their pressing their claim for salary
differential, which they had earlier filed against
respondent and the Bank of Commerce before the NLRC.
They also contended that the transfer to Manila was
inconvenient and prejudicial, since they would incur
additional expenses for board and lodging.
On 22 May 2006, the Labor Arbiter (LA) rendered a
Decision finding that petitioners were illegally dismissed
34
which the NLRC affirmed.
On 23 January 2008, respondent filed a Motion for
Extension to file a Petition for Certiorari before the CA.
In a Resolution dated 20 February 2008, the latter granted
the Motion for Extension, allowing respondent until 10
February 2008 within which to file its Petition. On 9
February 2008, respondent filed its Petition for Certiorari
before the appellate court. On 30 June 2008, the CA
issued a Resolution noting that no comment on the
Petition had been filed, and stating that the case was now
deemed submitted for resolution.
On 21 July 2008, the CA rendered its Decision. Finding
merit in the Petition, it found the Orders transferring
petitioners to Manila to be a valid exercise of management
prerogative.
On 1 August 2008, petitioner Mojar filed a Manifestation
before the CA, stating that he and the other petitioners had
not been served a copy of the CA Petition. He also said
that they were not aware whether their counsel before the
NLRC, Atty. Jose C. Espinas, was served a copy thereof,
since the latter had already been bedridden since
December 2007 until his demise on 25 February 2008.
Neither could their new counsel, Atty. Mario G. Aglipay,
enter his appearance before the CA, as petitioners failed
to get the folder from the office of Atty. Espinas, as the
folder can no longer be found. In a Resolution dated 16
March 2009, the CA denied the Motion to Annul
Proceedings. Hence, this Petition.
ISSUE:
Whether the CA should not have taken cognizance of the
petition as their actual addresses were not indicated
therein
REMEDIAL LAW
Petitioners contend that the CA should not have taken
cognizance of the Petition before it, as their actual
addresses were not indicated therein as required under
Section 3, Rule 46 of the Rules of Court, and pursuant to
Cenda v. Avila. In the 2008 case Cenda, this Court ruled
that the requirement that a petition forcertiorarimust
contain the actual addresses of all the petitioners and the
respondents is mandatory. The failure to comply with that
requirement is a sufficient ground for the dismissal of a
petition.
This rule, however, is not absolute. In the 2011 case
Santos v. Litton Mills Incorporated, this Court ruled that
where the petitioner clearly mentioned that the parties
may be served with the courts notices or processes
through their respective counsels, whose addresses have
been clearly specified as in this case, this act would
constitute substantial compliance with the requirements
of Section 3, Rule 46. The Court further observed that the
notice required by law is notice to counsel if the party has
already appeared by counsel, pursuant to Section 2, Rule
13 of the Rules of Court. The foregoing may thus be
considered as substantial compliance with Section 3, Rule
46. In any case, and as will be discussed further below,
the CA had sufficient reason to take cognizance of the
Petition.
REMEDIAL LAW
Section 3, Rule 46 provides that the petition for certiorari
should be filed together with the proof of service thereof
on the respondent. Under Section 13, Rule 13 of the Rules
of Court, if service is made by registered mail, as in this
case, proof shall be made by an affidavit of the person
mailing and the registry receipt issued by the mailing
office. Section 3, Rule 46 further provides that the failure
to comply with any of the requirements shall be sufficient
ground for the dismissal of the petition. Indeed, while an
affidavit of service is required merely as proof that service
has been made on the other party, it is nonetheless
essential to due process and the orderly administration of
justice.
Be that as it may, it does not escape the attention of this
Court that in the CA Resolution dated 16 March 2009, the
appellate court stated that their records revealed that Atty.
Espinas, petitioners counsel of record at the time, was
duly served a copy of the following: CA Resolution dated
20 February 2008 granting respondents Motion for
Extension of Time to file the CA Petition; CA Resolution
dated 24 April 2008 requiring petitioners to file their
Comment on the CA Petition; and CA Resolution dated
30 June 2008, submitting the case for resolution, as no
comment was filed.
Such service to Atty. Espinas, as petitioners counsel of
record, was valid despite the fact he was already deceased
at the time. If a party to a case has appeared by counsel,
service of pleadings and judgments shall be made upon
35
his counsel or one of them, unless service upon the party
is specifically ordered by the court. It is not the duty of
the courts to inquire, during the progress of a case,
whether the law firm or partnership representing one of
the litigants continues to exist lawfully, whether the
partners are still alive, or whether its associates are still
connected with the firm.
It is the duty of party-litigants to be in contact with their
counsel from time to time in order to be informed of the
progress of their case. It is likewise the duty of parties to
inform the court of the fact of their counsels death. Their
failure to do so means that they have been negligent in the
protection of their cause. They cannot pass the blame to
the court, which is not tasked to monitor the changes in
the circumstances of the parties and their counsel.
REMEDIAL LAW
Petitioners claim that Atty. Espinas passed away on 8
February 2008. They further claim that he was already
bedridden as early as December 2007, and thus they failed
to get any information whether [he] was served with a
copy of the [CA Petition].
Petitioners were negligent in the conduct of their
litigation. Having known that Atty. Espinas was already
bedridden as early as December 2007, they should have
already obtained new counsel who could adequately
represent their interests. The excuse that Atty. Aglipay
could not enter his appearance before the CA because
[petitioners] failed to get their folder from the office of
Atty. Espinas is flimsy at best.
The fact that petitioners were unable to obtain their folder
from Atty. Espinas is immaterial. Proof of service upon
the lawyer to be substituted will suffice where the lawyers
consent cannot be obtained. With respect to the records of
the case, these may easily be reconstituted by obtaining
copies thereof from the various courts involved.
LISAM ENTERPRISES, INC. ETC VS. BDO, ET AL.
FACTS:
This resolves the Petition for Review on Certiorari under
Rule 45 of the Rules of Court, praying that the
Resolution[1] of the Regional Trial Court of Legaspi City
(RTC), dated November 11, 1999, dismissing petitioners
complaint, and its Order[2] dated May 15, 2000, denying
herein petitioners Motion for Reconsideration and Motion
to Admit Amended Complaint, be reversed and set aside.
The records reveal the following antecedent facts.
On August 13, 1999, petitioners filed a Complaint against
respondents for Annulment of Mortgage with Prayer for
Temporary Restraining Order & Preliminary Injunction
with Damages with the RTC of Legaspi City. Petitioner
Lolita A. Soriano alleged that she is a stockholder of
petitioner Lisam Enterprises, Inc. (LEI) and a member of
its Board of Directors, designated as its Corporate
Secretary. The Complaint also alleged the following:
4. Sometime in 1993, plaintiff LEI, in the
course of its business operation, acquired by purchase a
parcel of residential land with improvement situated at
Legaspi City, covered by Transfer Certificate of Title No.
37866, copy attached as Annex A, which property is more
particularly described as follows:
xxxx
5. On or about 28 March 1996, defendant
Lilian S. Soriano and the late Leandro A. Soriano, Jr., as
husband and wife (hereafter Spouses Soriano), in their
personal capacity and for their own use and benefit,
obtained a loan from defendant PCIB (Legaspi Branch)
(now known as Banco de Oro Unibank, Inc.) in the total
amount of P20 Million;
6. That as security for the payment of the
aforesaid credit accommodation, the late Leandro A.
Soriano, Jr. and defendant Lilian S. Soriano, as president
and treasurer, respectively of plaintiff LEI, but without
authority and consent of the board of said plaintiff and
with the use of a falsified board resolution, executed a real
estate mortgage on 28 March 1996, over the above-
described property of plaintiff LEI in favor of defendant
PCIB, and had the same registered with the Office of the
Registry of Deeds, Legaspi City, copy of the Real Estate
Mortgage is hereto attached and marked as Annex B, and
made part hereof, to the prejudice of plaintiffs;
7. That specifically, the Spouses Soriano, with
intent to defraud and prejudice plaintiff LEI and its
stockholders, falsified the signatures of plaintiff Lolita A.
Soriano as corporate secretary and director of plaintiff
LEI, in a document denominated as board resolution
purportedly issued by the board of plaintiff LEI on 6
November 1995, making it appear that plaintiff LEI's
Board met and passed a board resolution on said date
36
authorizing the Spouses Soriano to mortgage or encumber
all or substantially all of the properties of plaintiff LEI,
when in fact and in truth, no resolution of that nature was
ever issued by the board of plaintiff LEI, nor a meeting
was called to that effect, copy of the resolution in question
is hereto attached and marked as Annex C, and made part
hereof
8. That plaintiff Lolita A. Soriano as Corporate
Secretary of plaintiff LEI, had never signed a board
resolution nor issued a Secretary's Certificate to the effect
that on 6 November 1995 a resolution was passed and
approved by plaintiff LEI authorizing the Spouses
Soriano as president and treasurer, respectively, to
mortgage the above-described property of plaintiff LEI,
neither did she appear personally before a notary public
on 28 March 1996 to acknowledge or attest to the issuance
of a supposed board resolution issued by plaintiff LEI on
6 November 1995
9. That defendant PCIB, knowing fully well
that the property being mortgaged by the Spouses Soriano
belongs to plaintiff LEI, a corporation, negligently and
miserably failed to exercise due care and prudence
required of a banking institution. Specifically, defendant
PCIB failed to investigate and to delve into the propriety
of the issuance of or due execution of subject board
resolution, which is the very foundation of the validity of
subject real estate mortgage. Further, it failed to verify the
genuineness of the signatures appearing in said board
resolution nor to confirm the fact of its issuance with
plaintiff Lolita A. Soriano, as the corporate secretary of
plaintiff LEI. Furthermore, the height of its negligence
was displayed when it disregarded or failed to notice that
the questioned board resolution with a Secretary's
Certificate was notarized only on 28 March 1996 or after
the lapse of more than four (4) months from its purported
date of issue on 6 November 1995. That these
circumstances should have put defendant PCIB on notice
of the flaws and infirmities of the questioned board
resolution. Unfortunately, it negligently failed to exercise
due care and prudence expected of a banking institution;
10. That having been executed without authority
of the board of plaintiff LEI said real estate mortgage
dated 28 March 1996 executed by the Spouses Soriano, as
officers of plaintiff LEI in favor of defendant PCIB, is the
null and void and has no legal effect upon said
plaintiff. Consequently, said mortgage deed cannot be
used nor resorted to by defendant PCIB against subject
property of plaintiff LEI as no right or rights whatsoever
were created nor granted thereunder by reason of its
nullity;
11. Worst, sometime in August 1998, in order to
remedy the defects in the mortgage transaction entered by
the Spouses Soriano and defendant PCIB, the former,
with the unlawful instigation of the latter, signed a
document denominated as Deed of Assumption of Loans
and Mortgage Obligations and Amendment of Mortgage;
wherein in said document, plaintiff LEI was made to
assume the P20 Million personal indebtedness of the
Spouses Soriano with defendant PCIB, when in fact and
in truth it never so assumed the same as no board
resolution duly certified to by plaintiff Lolita A. Soriano
as corporate secretary was ever issued to that effect, copy
of said Deed is hereto attached and marked as Annex D,
and made part hereof;
12. Moreover, to make it appear that plaintiff LEI
had consented to the execution of said deed of assumption
of mortgage, the Spouses Soriano again, through the
unlawful instigation and connivance of defendant PCIB,
falsified the signature of plaintiff Lolita A. Soriano as
corporate secretary of plaintiff LEI in a document
denominated as Corporate Resolution to Borrow, to make
it appear that plaintiff LEI so authorized the Spouses
Soriano to perform said acts for the corporation, when in
fact and in truth no such authority or resolution was ever
issued nor granted by plaintiff LEI, nor a meeting called
and held for said purpose in accordance with its By-laws;
copy of which is hereto attached and marked as Annex E
and made part hereof
13. That said irregular transactions of defendant
Lilian S. Soriano and her husband Leandro A. Soriano,
Jr., on one hand, and defendant PCIB, on the other, were
discovered by plaintiff Lolita A. Soriano sometime in
April 1999. That immediately upon discovery, said
plaintiff, for herself and on behalf and for the benefit of
plaintiff LEI, made demands upon defendants Lilian S.
Soriano and the Estate of Leandro A. Soriano, Jr., to free
subject property of plaintiff LEI from such mortgage lien,
by paying in full their personal indebtedness to defendant
PCIB in the principal sum of P20 Million. However, said
defendants, for reason only known to them, continued and
still continue to ignore said demands, to the damage and
prejudice of plaintiffs;
14. Hence, on 25 June 1999, plaintiffs
commenced a derivative suit against defendants Lilian S.
Soriano and the Estate of Leandro A. Soriano, Jr., before
the Securities and Exchange Commission, docketed as
37
SEC Case No. 06-99-6339 for Fraudulent Scheme and
Unlawful Machination with Damages in order to protect
On September 28, 1999, respondent PCIB filed a Motion
and preserve the rights of plaintiffs, copy of said
to Dismiss the Complaint on grounds of lack of legal
complaint is hereto attached as AnnexF;
capacity to sue, failure to state cause of action, and litis
15. That plaintiffs, in order to seek complete pendencia.Petitioners filed an Opposition thereto, while
relief from the unauthorized mortgage transaction PCIB's co-defendants filed a Motion to Suspend Action
between the Spouses Soriano and defendant PCIB, were
On November 11, 1999, the RTC issued the first assailed
further compelled to institute this instant case to seek the
Resolution dismissing petitioners' Complaint. Petitioners
nullification of the real estate mortgage dated 28 March
then filed a Motion for Reconsideration of said
1999. Consequently, plaintiffs were forced to retain the
Resolution.While awaiting resolution of the motion for
services of a lawyer with whom they contracted to
reconsideration, petitioners also filed, on January 4, 2000,
pay P100,000.00 as and for attorney's fee;
a Motion to Admit Amended Complaint, amending
16. That unfortunately, the plaintiffs learned that paragraph 13 of the original complaint to read as follows:
on 30 July 1999, defendant Sarte, in his capacity as
13. That said irregular transactions of defendant Lilian S.
Notary Public of Daraga, Albay and upon application of
Soriano and her husband Leandro A. Soriano, Jr., on one
defendant PCIB, issued a notice of Auction/Foreclosure
hand, and defendant PCIB, on the other, were discovered
Sale of the property subject of the mortgage in question
by plaintiff Lolita A. Soriano sometime in April
and has set the auction sale on 7 September 1999 x x x;
1999. That immediately upon discovery, said plaintiff, for
17. That by reason of the fraudulent and herself and on behalf and for the benefit of plaintiff LEI,
surreptitious schemes perpetrated by defendant Lilian S. made demands upon defendant Lilian S. Soriano and the
Soriano and her husband, the late Leandro A. Soriano, Jr., Estate of Leandro A. Soriano, Jr., to free subject property
in unlawful connivance and through the gross negligence of plaintiff LEI from such mortgage lien, by paying in full
of defendant PCIB, plaintiff Lolita A. Soriano, as their personal indebtedness to defendant PCIB in the
stockholder, suffered sleepless nights, moral shock, principal sum of P20 Million. However, said defendants,
wounded feeling, hurt pride and similar injuries, hence, for reason only known to them, continued and still
should be awarded moral damages in the amount continue to ignore said demands, to the damage and
of P200,000.00. prejudice of plaintiffs; that plaintiff Lolita A. Soriano
likewise made demands upon the Board of Directors of
After service of summons on all defendants, the RTC
Lisam Enterprises, Inc., to make legal steps to protect the
issued a temporary restraining order on August 25, 1990
interest of the corporation from said fraudulent
and, after hearing, went on to issue a writ of preliminary
transaction, but unfortunately, until now, no such legal
injunction enjoining respondent PCIB (now known as
step was ever taken by the Board, hence, this action for
Banco de Oro Unibank, Inc.) from proceeding with the
the benefit and in behalf of the corporation;
auction sale of the subject property.
On May 15, 2000, the trial court issued the questioned
Respondents Lilian S. Soriano and the Estate of Leandro
Order denying both the Motion for Reconsideration and
A. Soriano, Jr. filed an Answer dated September 25, 1999,
the Motion to Admit Amended Complaint. The trial court
stating that the Spouses Lilian and Leandro Soriano, Jr.
held that no new argument had been raised by petitioners
were duly authorized by LEI to mortgage the subject
in their motion for reconsideration to address the fact of
property; that proceeds of the loan from respondent PCIB
plaintiffs' failure to allege in the complaint that petitioner
were for the use and benefit of LEI; that all notarized
Lolita A. Soriano made demands upon the Board of
documents submitted to PCIB by the Spouses Soriano
Directors of Lisam Enterprises, Inc. to take steps to
bore the genuine signature of Lolita Soriano; and that
protect the interest of the corporation against the
although the Spouses Soriano indeed received demands
fraudulent acts of the Spouses Soriano and PCIB. The
from petitioner Lolita Soriano for them to pay the loan,
trial court further ruled that the Amended Complaint can
they gave satisfactory explanations to the latter why her
no longer be admitted, because the same absolutely
demands could not be honored. It was, likewise, alleged
changed petitioners' cause of action.
in said Answer that it was respondent Lilian Soriano who
should be entitled to moral damages and attorney's fees.

38
RULING:
The petition is impressed with merit.
The Court shall first delve into the matter of the propriety
of the denial of the motion to admit amended
complaint. Pertinent provisions of Rule 10 of the Rules of
Court provide as follows:
Sec. 2. Amendments as a matter of right. − A party may
amend his pleadings once as a matter of right at any time
before a responsive pleading is served x x x.
Sec. 3. Amendments by leave of court. − Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of court. But
such leave may be refused if it appears to the court that
the motion was made with intent to delay. x x x
It should be noted that respondents Lilian S. Soriano and
the Estate of Leandro A. Soriano, Jr. already filed their
Answer, to petitioners' complaint, and the claims being
asserted were made against said parties. A responsive
pleading having been filed, amendments to the complaint
may, therefore, be made only by leave of court and no
longer as a matter of right. However, in Tiu v. Philippine
Bank of Communications,[4] the Court discussed this rule
at length, to wit:
x x x [A]fter petitioners have filed their answer, Section
3, Rule 10 of the Rules of Court specifically allows
amendment by leave of court. The said Section states
SECTION 3. Amendments by leave of court. - Except as
provided in the next preceding section, substantial
amendments may be made only upon leave of court. But
such leave may be refused if it appears to the court that
the motion was made with intent to delay. Orders of the
court upon the matters provided in this section shall be
made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.
This Court has emphasized the import of Section 3, Rule
10 of the 1997 Rules of Civil Procedure in Valenzuela v.
Court of Appeals, thus:
Interestingly, Section 3, Rule 10 of the 1997 Rules of
Civil Procedure amended the former rule in such manner
that the phrase "or that the cause of action or defense is
substantially altered" was stricken-off and not retained in
the new rules. The clear import of such amendment in
Section 3, Rule 10 is that under the new rules, "the
amendment may (now) substantially alter the cause of
action or defense." This should only be true, however,
when despite a substantial change or alteration in the
cause of action or defense, the amendments sought to be
made shall serve the higher interests of substantial justice,
and prevent delay and equally promote the laudable
objective of the rules which is to secure a "just, speedy
and inexpensive disposition of every action and
proceeding.
The granting of leave to file amended pleading is a matter
particularly addressed to the sound discretion of the trial
court; and that discretion is broad, subject only to the
limitations that the amendments should not substantially
change the cause of action or alter the theory of the case,
or that it was not made to delay the action. Nevertheless,
as enunciated in Valenzuela, even if the amendment
substantially alters the cause of action or defense, such
amendment could still be allowed when it is sought to
serve the higher interest of substantial justice, prevent
delay, and secure a just, speedy and inexpensive
disposition of actions and proceedings.
The courts should be liberal in allowing amendments
to pleadings to avoid a multiplicity of suits and in
order that the real controversies between the parties
are presented, their rights determined, and the case
decided on the merits without unnecessary delay. This
liberality is greatest in the early stages of a lawsuit,
especially in this case where the amendment was made
before the trial of the case, thereby giving the
petitioners all the time allowed by law to answer and
to prepare for trial.
Furthermore, amendments to pleadings are generally
favored and should be liberally allowed in furtherance of
justice in order that every case, may so far as possible, be
determined on its real facts and in order to speed up the
trial of the case or prevent the circuitry of action and
unnecessary expense. That is, unless there are
circumstances such as inexcusable delay or the taking of
the adverse party by surprise or the like, which might
justify a refusal of permission to amend.[5]
Since, as explained above, amendments are generally
favored, it would have been more fitting for the trial court
to extend such liberality towards petitioners by admitting
the amended complaint which was filed before the order
dismissing the original complaint became final and
executory. It is quite apparent that since trial proper had
not yet even begun, allowing the amendment would not
have caused any delay. Moreover, doing
39
so would have served the higher interest of justice as this
would provide the best opportunity for the issues among
all parties to be thoroughly threshed out and the rights of
all parties finally determined. Hence, the Court overrules
the trial court's denial of the motion to admit the amended
complaint, and orders the admission of the same.
With the amendment stating that plaintiff Lolita A.
Soriano likewise made demands upon the Board of
Directors of Lisam Enterprises, Inc., to make legal steps
to protect the interest of the corporation from said
fraudulent transaction, but unfortunately, until now, no
such legal step was ever taken by the Board, hence, this
action for the benefit and in behalf of the corporation,
does the amended complaint now sufficiently state a
cause of action? In Hi-Yield Realty, Incorporated v. Court
of Appeals,[6] the Court enumerated the requisites for
filing a derivative suit, as follows:
a) the party bringing the suit should be a shareholder as of
the time of the act or transaction complained of, the
number of his shares not being material;
b) he has tried to exhaust intra-corporate
remedies, i.e., has made a demand on the board of
directors for the appropriate relief but the latter has failed
or refused to heed his plea; and
c) the cause of action actually devolves on the
corporation, the wrongdoing or harm having been, or
being caused to the corporation and not to the particular
stockholder bringing the suit.[7]
A reading of the amended complaint will reveal that all
the foregoing requisites had been alleged therein. Hence,
the amended complaint remedied the defect in the original
complaint and now sufficiently states a cause of action.
Respondent PCIB should not complain that admitting the
amended complaint after they pointed out a defect in the
original complaint would be unfair to them. They should
have been well aware that due to the changes made by the
1997 Rules of Civil Procedure, amendments may now
substantially alter the cause of action or defense. It should
not have been a surprise to them that petitioners would
redress the defect in the original complaint by
substantially amending the same, which course of action
is now allowed under the new rules.
MA. MERCEDES BARBA VS LICEO DE
CAGAYAN UNIVERSITY
FACTS:
Petitioner Dr. Ma. Mercedes L. Barba (Barba) was the
Dean of the College of Physical Therapy of respondent
Liceo de Cagayan University, Inc. (Liceo).
In the school year 2003 to 2004, the College of Physical
Therapy suffered a dramatic decline in the number of
enrollees from a total of 1,121 students in the school year
1995 to 1996 to only 29 students in the first semester of
school year 2003 to 2004. Due to the low number of
enrollees, Liceo decided to freeze the operation of the
College of Physical Therapy indefinitely. Thereafter, the
College of Physical Therapy ceased operations and Barba
went on leave without pay starting. Subsequently, Liceo
sent Barba a letter dated April 27, 2005 instructing Barba
to return to work on and report to Ma. Chona Palomares,
the Acting Dean of the College of Nursing, to receive her
teaching load and assignment as a full-time faculty
member in that department. Barba did not report to
Palomares and requested for the processing of her
separation benefits in view of the closure of the College
of Physical Therapy.
Another letter was sent to Barba but the latter still refused
to return to work. Hence, Liceo sent Barba a notice
terminating her services on the ground of abandonment.
Barba filed a complaint before the Labor Arbiter for
illegal dismissal, payment of separation pay and
retirement benefits againstLiceo. She alleged that her
transfer to the College of Nursing as a faculty member is
a demotion amounting to constructive dismissal.
The LA ruled that Barba was not constructively
dismissed. The NLRC reversed the LA. Liceo went to the
CA and filed a Supplemental Petition raising for the first
time the issue of lack of jurisdiction of the Labor Arbiter
and the NLRC over the case. Liceo claimed that a College
Dean is a corporate officer under its by-laws and Barba
was a corporate officer of Liceo since her appointment
was approved by the board of directors. Thus, Liceo
maintained that the jurisdiction over the case is with the
regular courts and not with the labor tribunals.
In its original Decision, the CA reversed the NLRC
resolutions. The CA did not find merit in Liceos assertion
in its Supplemental Petition that the position of Barba as
40
College Dean was a corporate office. The CA further
found that no constructive dismissal occurred nor has
Barba abandoned her work.
Unsatisfied, both Barba and Liceo sought reconsideration
of the CA decision. Thereafter, the CA reversed its earlier
ruling. Hence,Barba filed the present petition.
ISSUE:
The decisive issue in the present petition is whether
petitioner was an employee or a corporate officer of
respondent university. Resolution of this issue resolves
the question of whether the appellate court was correct in
ruling that the Labor Arbiter and the NLRC had no
jurisdiction over petitioner’s complaint for constructive
dismissal against respondent
RULING:
We grant the petition. Prefatorily, we first discuss the
procedural matter raised by respondent that the present
petition is filed out of time. Respondent claims that
petitioner’s motion for reconsideration from the Amended
Decision is a second motion for reconsideration which is
a prohibited pleading. Respondent’s assertion, however,
is misplaced for it should be noted that the CA’s Amended
Decision totally reversed and set aside its previous ruling.
Section 2, Rule 52 of the 1997 Rules of Civil Procedure,
as amended, provides that no second motion for
reconsideration of a judgment or final resolution by the
same party shall be entertained. This contemplates a
situation where a second motion for reconsideration is
filed by the same party assailing the same judgment or
final resolution. Here, the motion for reconsideration of
petitioner was filed after the appellate court rendered an
Amended Decision totally reversing and setting aside its
previous ruling. Hence, petitioner is not precluded from
filing another motion for reconsideration from the
Amended Decision which held that the labor tribunals
lacked jurisdiction over petitioner’s complaint for
constructive dismissal. The period to file an appeal should
be reckoned not from the denial of her motion for
reconsideration of the original decision, but from the date
of petitioner’s receipt of the notice of denial of her motion
for reconsideration from the Amended Decision. And as
petitioner received notice of the denial of her motion for
reconsideration from the Amended Decision on
September 23, 2010 and filed her petition on November
8, 2010, or within the extension period granted by the
Court to file the petition, her petition was filed on time.
SPS. VILLUGA VS. KELLY HARDWARE &
CONSTRUCTION SUPPLY, ET AL.
FACTS:
On March 3, 1995, herein respondent filed with the RTC
of Bacoor, Cavite a Complaint for a Sum of Money and
Damages against herein petitioners alleging as follows:
xxxx
(3) During the period of November 19, 1992 to January 5,
1993, defendants [herein petitioners] made purchases of
various construction materials from plaintiff corporation
[herein respondent] in the sum of P259,809.50, which has
not been paid up to the present time, both principal and
stipulated interests due thereon.
(4) Plaintiff made several demands, oral and written, for
the same defendants to pay all their obligations due
plaintiff herein, but defendants fail and refuse to comply
with, despite demands made upon them, to the damage
and prejudice of plaintiff.
xxxx
WHEREFORE, premises considered, it is most
respectfully prayed of this Honorable Court that judgment
be rendered in favor of plaintiff and against defendants by
ordering defendants to pay the sum of:
(1) P259,809.50 as principal obligation due plaintiff, plus
interest due thereon at 14% interest per annum, until all
sums due are paid in full.
(2) P64,952.38 by way of reimbursements of attorney's
fees plus P500.00 appearance fee in court.
(3) P26,000.00 for litigation and other related expenses.
And to pay the cost of suit.3
In their Answer to Complaint,4 petitioners admitted
having made purchases from respondent, but alleged that
they do not remember the exact amount thereof as no copy
of the documents evidencing the purchases were attached
to the complaint. Petitioners, nonetheless, claimed that
they have made payments to the respondent on March 4,
1994 and August 9, 1994 in the amounts of P110,301.80
and P20,000.00, respectively, and they are willing to pay
the balance of their indebtedness after deducting the
payments made and after verification of their account.
In a Manifestation5 dated July 18, 1995, petitioners stated
that in order to buy peace, they were willing to pay
41
respondent the principal sum of P259,809.50, but without
interests and costs, and on installment basis.
In its Counter Manifestation,6 respondent signified that it
was amenable to petitioners' offer to pay the principal
amount of P259,809.50. However, respondent insisted
that petitioners should also pay interests, as well as
litigation expenses and attorney's fees, and all incidental
expenses.
Subsequently, on August 11, 1995, respondent filed a
Motion for Partial Judgment on the Pleadings7 contending
that petitioners were deemed to have admitted in their
Answer that they owed respondent the amount of
P259,809.50 when they claimed that they made partial
payments amounting to P130,301.80. Based on this
premise, respondent prayed that it be awarded the
remaining balance of P129,507.70. Petitioners filed their
Opposition8 to the said Motion.
On September 11, 1995, the RTC issued an
Order9 deferring resolution of respondent's Motion for
Partial Judgment on the ground that there is no clear and
specific admission on the part of petitioners as to the
actual amount that they owe respondent.
On January 30, 1996, respondent filed an Amended
Complaint,10 with leave of court, alleging that between
October 1992 until January 5, 1993, petitioners purchased
from it (respondent) various construction materials and
supplies, the aggregate value of which is P279,809.50;
that only P20,000.00 had been paid leaving a balance of
P259,809.50.
In their Answer to Amended Complaint,11 petitioners
reiterated their allegations in their Answer to Complaint.
On March 8, 1996, respondent filed a Request for
Admission12 asking that petitioners admit the genuineness
of various documents, such as statements of accounts,
delivery receipts, invoices and demand letter attached
thereto as well as the truth of the allegations set forth
therein.
Respondent basically asked petitioners to admit that the
latter's principal obligation is P279,809.50 and that only
P20,000.00 was paid.
On June 3, 1996, respondent filed a Manifestation and
Motion13 before the RTC praying that since petitioners
failed to timely file their comment to the Request for
Admission, they be considered to have admitted the
genuineness of the documents described in and exhibited
with the said Request as well as the truth of the matters of
fact set forth therein, in accordance with the Rules of
Court.
On June 6, 1996, petitioners filed their Comments on the
Request for Admission14 stating their objections to the
admission of the documents attached to the Request.
On January 24, 1997, respondent filed its Second
Amended Complaint,15 again with leave of court. The
amendment modified the period covered by the
complaint. Instead of October 1992 to January 5, 1993, it
was changed to July 29, 1992 until August 10, 1994. The
amendment also confirmed petitioners' partial payment in
the sum of P110,301.80 but alleged that this payment was
applied to other obligations which petitioners owe
respondent. Respondent reiterated its allegation that,
despite petitioners' partial payment, the principal amount
which petitioners owe remains P259,809.50.
Petitioners filed their Answer to the Second Amended
Complaint16 denying the allegations therein and insisting
that they have made partial payments.
On September 4, 1997, respondent filed a Motion to
Expunge with Motion for Summary Judgment17 claiming
that petitioners' Comments on respondent's Request for
Admission is a mere scrap of paper as it was signed by
petitioners' counsel and not by petitioners themselves and
that it was filed beyond the period allowed by the Rules
of Court. Respondent goes on to assert that petitioners, in
effect, were deemed to have impliedly admitted the
matters subject of the said request. Respondent also
contended that it is already entitled to the issuance of a
summary judgment in its favor as petitioners not only
failed to tender a genuine issue as to any material fact but
also did not raise any special defenses, which could
possibly relate to any factual issue.
In their Opposition to Motion to Expunge with Motion for
Summary Judgment,18 petitioners argued that
respondent's request for admission is fatally defective,
because it did not indicate or specify a period within
which to answer; that verification by petitioners' counsel
is sufficient compliance with the Rules of Court; that
petitioners' request for admission should be deemed
dispensed with and no longer taken into account as it only
relates to the Amended Complaint, which was already
abandoned when the Second Amended Complaint was
filed; and that summary judgment is improper and without
legal basis, as there exists a genuine controversy brought
about by petitioners' specific denials and defenses.
42
ISSUE:
THE HONORABLE COURT SHOULD NOT HAVE
DENIED DEFENDANTS-APPELLANTS'
(PETITIONERS) COMMENT AND RULED THAT
THERE WAS IMPLIED ADMISSION CONTAINED IN
THE REQUEST.
RULING:
In their first assigned error, petitioners insist in arguing
that respondent waived its Request for Admission when it
filed its Second Amended Complaint; that all motions or
requests based on the complaint, which was amended,
should no longer be considered. Petitioners also contend
that the Request for Admission was not in the form
specified by the Rules of Court as it did not specify a
period within which to reply as required by Section 1,
Rule 26 of the same Rules.
The petition lacks merit.
The Court agrees with the CA in holding that respondent's
Second Amended Complaint supersedes only its
Amended Complaint and nothing more.
Section 8, Rule 10 of the Rules of Court provides:
Sec. 8. Effect of amended pleading. – An amended
pleading supersedes the pleading that it amends.
However, admissions in superseded pleadings may be
received in evidence against the pleader; and claims or
defenses alleged therein not incorporated in the amended
pleading shall be deemed waived.
From the foregoing, it is clear that respondent's Request
for Admission is not deemed abandoned or withdrawn by
the filing of the Second Amended Complaint.
The Court also finds no error when the CA ruled that
petitioners' Comments on the Request for Admission was
filed out of time, and quotes with approval the disquisition
of the appellate court on this matter, to wit:
x x x Pursuant to the above-quoted Section 2 of Rule 26
of the Rules of Court, the party to whom the request is
directed must respond to the request within a period of not
less than ten (10) days after the service thereof, or upon
such further time the Court may allow on motion. In the
instant case, the plaintiff-appellee's herein respondent's
"Request" failed to designate any period for the filing of
the defendants-appellants' herein petitioners' response.
Neither did the trial court fix the period for the same upon
motion of the parties. However, such failure to designate
does not automatically mean that the filing or the service
of an answer or comment to the "Request" would be left
to the whims and caprices of defendants-appellants. It
must be reiterated that one of the main objectives of Rule
26 is to expedite the trial of the case (Duque vs. Court of
Appeals, 383,
SCRA 520, 527 2002 ). Thus, it is also provided in the
second paragraph of Section 2 of Rule 26 of the Rules of
Court that "[o]bjections on the ground of irrelevancy or
impropriety of the matter requested shall be promptly
submitted to the court for resolution."21
Nonetheless, the Court takes exception to the ruling of the
CA that by reason of the belated filing of petitioners'
Comments on the Request for Admission, they are
deemed to have impliedly admitted that they are indebted
to respondent in the amount of P259,809.50.
A careful examination of the said Request for Admission
shows that the matters of fact set forth therein are simply
a reiteration of respondent's main allegation in its
Amended Complaint and that petitioners had already set
up the affirmative defense of partial payment with respect
to the above allegation in their previous pleadings.
This Court has ruled that if the factual allegations in the
complaint are the very same allegations set forth in the
request for admission and have already been specifically
denied, the required party cannot be compelled to deny
them anew.22 A request for admission that merely
reiterates the allegations in an earlier pleading is
inappropriate under Rule 26 of the Rules of Court, which
as a mode of discovery, contemplates of interrogatories
that would clarify and tend to shed light on the truth or
falsity of the allegations in the pleading.23 Rule 26 does
not refer to a mere reiteration of what has already been
alleged in the pleadings.24 Nonetheless, consistent with
the abovementioned Rule, the party being requested
should file an objection to the effect that the request for
admission is improper and that there is no longer any need
to deny anew the allegations contained therein
considering that these matters have already been
previously denied.
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PLANTERS DEVELOPMENT BANK VS. JULIE
CHANDUMAL
FACTS:
BF Homes and Julie Chandumal entered into a contract to
sell a parcel of land located in Las Pinas. Later, BF Homes
sold to PDB all its rights over the contract.
Chandumal paid her monthly amortizations until she
defaulted in her payments. So, PDB sent a notice to
Chandumal with a demand to vacate the land within
30days, otherwise all of her rights will be extinguished
and the contract will be terminated and deemed rescinded.
In spite of the demand, Chandumal failed to settle her
account.
PDB filed an action for judicial confirmation of notarial
rescission and delivery of possession but still Chandumal
refused to do so. Summons were then issued and served
by deputy sheriff Galing but its was unavailing as she was
always out of her house on the dates the summons were
served.
RTC then issued an order granting the motion of PDB.
Chandumal filed an urgent motion to set aside order of
default and to admit attached answer. Chandumal said
that she did not receive the summons and was not notified
of the same and her failure to file an answer within the
reglementary period was due to fraud. RTC denied
Chandumal's motion to set aside the order of default.
Chandumal appealed to the CA. CA nullified the RTC's
decision.
Issue: (1) Whether there was valid substituted service of
summons? (2) Whether Chandumal voluntarily submitted
to the jurisdiction of the RTC? (3) Whether there was
proper rescission by notarial act of the contract to sell?
Held:
(1) Correctly ruled that the sheriff’s return failed to justify
a resort to substituted service of summons. According to
the CA, the Return of Summons does not specifically
show or indicate in detail the actual exertion of efforts or
any positive step taken by the officer or process server in
attempting to serve the summons personally to the
defendant.
(2) The Court notes that aside from the allegation that she
did not receive any summons, Chandumal’s motion to set
aside order of default and to admit attached answer failed
to positively assert the trial court lack of jurisdiction. In
fact, what was set forth therein was the substantial claim
that PDB failed to comply with the requirements of R.A.
No. 6552 on payment of cash surrender value, which
already delves into the merits of PDB’s cause of action.
In addition, Chandumal even appealed the RTC decision
to the CA, an act which demonstrates her recognition of
the trial court’s jurisdiction to render said judgment.
(3) R.A. No. 6552 recognizes the right of the seller to
cancel the contract but any such cancellation must be done
in conformity with the requirements therein prescribed. In
addition to the notarial act of rescission, the seller is
required to refund to the buyer the cash surrender value of
the payments on the property. The actual cancellation of
the contract can only be deemed to take place upon the
expiry of a thirty (30)-day period following the receipt by
the buyer of the notice of cancellation or demand for
rescission by a notarial act and the full payment of the
cash surrender value.
Petition is denied.
BIACO VS. PHILIPPINE COUNTRYSIDE RURAL
BANK
FACTS:
Ernesto Biaco, husband of Teresa Biaco, acquired several
loans from Philippine Countryside Rural Bank (PCRB)
from 1996 to 1998. To secure the loans, he mortgaged
certain property in favor of the bank. He was able to pay
loans from 1996 to 1997 but he defaulted in loans
obtained in 1998 which amounted to more than a million
pesos.
Eventually, PCRB filed a complaint for foreclosure
against the spouses Biaco. Summons were issued by the
trial judge. The Sherriff served the summons to Ernesto at
the latter’s office. No summons was served to Teresa.
Ernesto did not file a responsive pleading (so did Teresa
because she was not aware sans the summons being
served her). The case was heard ex-parte and the spouses
were ordered to satisfy the debt and failure to do so will
authorize the Sheriff to auction the mortgaged the
property.
Eventually, the mortgaged property was auctioned for
P150k which is not sufficient to cover the P1 M+ debt.
Upon motion by PCRB, a notice of levy was issued
against the personal properties of Teresa to satisfy the
deficiency.
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It was only at this point that Teresa learned of the previous his opponent, as by keeping him away from court, a false
ex parte proceedings. She then sought to have the promise of a compromise; or where the defendant never
judgment annulled as she now claims that she was had knowledge of the suit, being kept in ignorance by the
deprived of due process when she did not receive acts of the plaintiff; or where an attorney fraudulently or
summons; that it was only her husband who received the without authority assumes to represent a party and
summons; that there was extrinsic fraud because her connives at his defeat; or where the attorney regularly
husband deliberately hid the fact of the foreclosure employed corruptly sells out his client’s interest to the
proceeding. other side. The above is not applicable in the case of
Teresa. It was not PCRB which made any fraud. It should
PRCB argued that the foreclosure proceeding is an action
be noted that spouses Biaco were co-defendants in the
quasi in rem, hence Teresa’s participation is not required
case and shared the same interest.
so long as the court acquires jurisdiction over the res
which is what happened in the case at bar; that Teresa
cannot invoke extrinsic fraud because such situation
cannot occur in her case because she is a co-defendant of
Ernesto.
ISSUE: Whether or not the judgment of the trial court
should be annulled.
HELD: Yes. It is admitted that the proceeding is a quasi
in rem proceeding and that the presence of Teresa is not
required because the trial court was able to acquire
jurisdiction over the res (mortgaged property).
HOWEVER, her constitutional right to due process is
superior over the procedural matters mentioned. Her right
to due process was violated when she did not receive
summons. Teresa, as a resident defendant, who does not
voluntary appear in court must be personally served with
summons as provided under Section 6, Rule 14 of the
Rules of Court. Even if the action is quasi in
rem, personal service of summons is essential in order to
afford her due process. The substituted service made by
the sheriff at her husband’s office cannot be deemed
proper service absent any explanation that efforts had
been made to personally serve summons upon her but that
such efforts failed. Further, the order of the trial court
compelling Teresa to pay off the debt using her personal
property is a judgment in personam which the court
cannot do because it only acquired jurisdiction over the
res and not over the person of Teresa.
On the issue of extrinsic fraud, the Court of Appeals,
agreeing with PCRB, is correct that there is none in the
case at bar. Extrinsic fraud exists when there is a
fraudulent act committed by the prevailing party outside
of the trial of the case, whereby the defeated party was
prevented from presenting fully his side of the case by
fraud or deception practiced on him by the prevailing
party. Extrinsic fraud is present where the unsuccessful
party had been prevented from exhibiting fully his case,
by fraud or deception practiced on him by
45